Bank of America Testing Reward Credit Card Annual Fees

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Bank of America officials told reporters this week that they would begin testing annual fees on some of their most popular reward credit cards in 2010. Spokesperson Betty Riess told the Associated Press that the test would apply to just one percent of the bank's current reward credit card accounts.

Credit card rewards programs often leave little margin for lenders, since interchange fees often cover the cost of cash back rebates, frequent flyer miles, and travel perks. Since Bank of America already announced a freeze on interest rates, industry analysts have suggested that annual fees can help the company recover revenue from high volume customers. As with the more typical repricing programs offered by other lenders, Bank of America requires account holders to accept new fee structures or forfeit the ability to process new transactions.

While canceled credit card accounts offer one form of customer feedback, changes to spending patterns hold other clues to consumer reception to the new fees. Many of Bank of America's competitors already charge annual fees for reward credit cards. Therefore, this test may help determine pricing levels that attract new customers without driving too many existing cardholders away.

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