Help! My Credit Card Is Adding An Annual Fee!

Michael is in a situation that we anticipate will become very, very common in the coming months. His credit card company has imposed a $99 annual fee. He can accept the fee, or close his account. Not only is this his only credit card, but it’s the oldest credit line he has, so closing it would hurt his credit score. What would you do?

I just received a notice from FIA Card Services regarding my (Formerly PNC) Worldpoints Visa Card.

“Your card will now be assessed an annual fee of $99, which will be billed on your Febuary statement each year. We appreciate your business and look forward to continuing to meet your credit card needs. If you accept this change, you will continue to enjoy valuable benefits such as the WorldPoints(R) rewards program, which lets you earn points you can redeem for travel,, merchandise, gift cards, cash and limited-edition memorabilia…

… You have the right to reject this change. INstructions are included in the enclosed Amendment. If you choose to reject this change, your account will be closed, and you must continue to make regular payments until your balance is paid in full…”

A little background info: This is currently my only credit card and is the single oldest thing on my credit report. Closing this card will most definitely adversely affect my credit score. A $99 annual fee seems absolutely outrageous to me. Is this sort of change allowed and is there anything I can do to prevent paying this fee aside from closing the account and taking the hit on my credit score? I’ll be shopping for student loans next year and need my score to be as high as possible.

This is a tough situation. The company is essentially holding Michael’s credit score hostage. Calling and asking for a waiver of the fee probably won’t work, since more credit cards will be adding annual fees. The threat of switching to another card doesn’t have the same impact that it did in, say, 2006.

We would suggest trying to negotiate with the company—ask if he can switch to a different card type, without reward points, but maintain the same account.

Any advice for Michael, or similar experiences to share?

(Photo: frankieleon)