Annual Credit Card Fee? Not a Bad Idea

Sorry, but I have to disagree with fellow bloggers Stacey Bradford and Jill Schlesinger. They and other goody-goody consumerists, among whom I usually number myself, attack credit card companies for plans to slap cardholders with annual fees to make up for all the extra vigorish they'll lose when credit card reforms go into effect next February. Well, much as I don't love the card industry, I'm here to say that annual fees are jake with me.

Goo-goo consumerists, of course, believe that the best way to manage your credit cards is to pay off all balances when the bill arrives. By doing that, you escape interest charges and late fees. And our Puritanical heritage tells us, rightfully perhaps, that virtue attaches to those who resist taking on debt, just as it does to paragons who rise early, exercise regularly and eat foods with antioxidant phytonutrients.

But just because you're saintly with your credit cards doesn't mean that you shouldn't have to pay. After all, even if you never carry a balance, when you charge a ticket, a bicycle, groceries or gas, you are using the payment systems operated by Visa, MasterCard, and American Express. And there is a cost to running them. Goo-goos who never carry a balance are outraged that in the lingo of the card industry, they are called "deadbeats," but in fact, they are. They are using something -- the automated payment system -- without paying for the convenience.

Virtue doesn't necessarily mean getting a free ride. That's like saying people who eat only blueberries and steamed fish shouldn't have to pay for restaurant meals -- or that those who are early to bed and early to rise should get a hotel room free. And, conversely, why should those who carry a balance (or eat French fries and sleep in--I plead guilty!) have to subsidize the others?

So, yes, card companies do have other sources of revenue, like merchant fees and interest, but an annual payment for using their service is not unfair.