New Annual Fee For Select BofA Credit Card Holders

NEW YORK (AP) - Bank of America is assessing a new $59 annual fee on select credit card holders.

The bank began mailing out notices of the new fee last week. The fee will be assessed on May statements and will affect about 5 percent of the bank's credit card customers, said Betty Riess, a company spokeswoman.

The fee isn't tied to a specific type of card and is based strictly on the customer's risk profile. For example, the selected customers may carry balances close to their credit limits, have lower-than-average FICO scores or regularly make late payments. They likely don't have any other relationship - such as a checking account or mortgage - with the bank, Riess said.

On average, the customers who are being assessed the fee are being charged a 14-percent interest rate. Bank of America said these customers generally would not be approved for a no-fee new account today at their current rates.

Under regulations that went into effect last year, credit card issuers must give a customer 45 days notice before changing any terms on an account. Card issuers are also now prohibited from raising rates in the first year after an account is opened, or on existing balances. Late fees and other penalty charges are capped at $25 per violation.

The industry has said the restrictions on pricing would result in higher costs and tighter credit for consumers.

However, a new study released Tuesday by CardHub.com suggested that interest rates hikes have largely been the result of the struggling economy. At the same time, banks may also be singling out less-than-prime customers with harsher terms such as new or higher annual fees, noted Odysseas Papadimitriou, founder of CardHub.com. That's because the new regulations made that group in particular less profitable for credit card issuers.