Tan Kin Lian's Blog: Non-renewal of credit card

Friday, July 16, 2010

Non-renewal of credit card

Last year, my bank charged me $700 as annual fee for the renewal of the credit card. This was the first time that the annual fee was imposed, as I was given the free use of the credit card for the previous years. They bank did not notify me in advance of this fee. I could have easily overlooked it in my statement.

I telephoned the hotline of the bank. Before I could ask about the annual fee, the bank officer offered to waive the fee and to restore the forfeited points, as he noted that I had used the credit card extensively for my payments (for which the bank did earn a commission). I thanked him for the kindness.

As the year is ending, I have just faxed this letter to the bank:

"I wish to inform you that I do not wish to renew my credit card on its expiry. Please acknowledge this instruction by reply to me at kinlian@gmail.com. I thank you for the wonderful service that you had rendered to me for the past years."

I feel that it is dishonest for the bank to try to levy a hefty annual fee, without getting the prior agreement of the customer.

Tan Kin Lian

7 comments:

Recruit Ong said...: my UOB card also same, only saw the bill then i realise got annual fee... call bank up they got this automated system, dun even need to speak to anyone, 2 days later they will sms u say the fee waived. u cannot really say there is no prior agreement cos the agreement u signed many yrs ago with bank will have stated bank got the right to do do that bla bla bla etc hahahaha! of cos i know this is veering towards the "opt-in system" style of doing things which is totally dishonest.; July 16, 2010 9:19 AM
Tan Kin Lian said...: Dear Recruit Ong,
Of course, the bank has this clause mentioned within the many pages of their agreement. Still, if they are charging the annual fee, they should tell the customer in advance.
As the bank is sneaky, and behave in this manner, I have decided to cancel my credit card.
I will ask other consumers to act in the same manner, so that our banks learn to be honorable again.; July 16, 2010 9:46 AM
rex said...: rex comments as follows,

If i am not wrong all the credit card comapany's invoices print out the terms and conditons in the other side of the invoice received each month.

Usually they will have a statement .. "your card will be auto renewed yearly and the annual fees wil be debited from your account", .. then usually they will provide a table to show you the exact charges, and how much you have to spend using the card to enjoy waiver of annual charges.

And usually if you spend enough each year, the waiver is applied in the background, so you don't notice.

Hence, it is unacceptable in this instance to suggest that the banks are "dishonest" because all these information is given EVERY month without fail in the invoice.

As to whether the renewal fee of $700 is too high or too low, this is usually a multi-tiered pricing scheme based on the card's liquidity limits and user preference. Usually the banks have different types of cards for different classes of customers, each one with different pricing for annual fees and privileges. Customer can choose a "lower grade" card as he.she pleases.

The only thing i dislike about the system is that it's very troublesome to contact the bank to ask for the waiver. I hope that a easier solution can be found.

Perhaps they should just simply lower the limits, i.e. you will be charged card annual fees if your purchases for the year are less than $300. Right now they use such onerous and complicated systems like "UNI$" (UOB) or OCBCDollar RobinsonDollar, to tally your spending...to make life complicated, for what i don;t know.

Life should be made simple, just like what tkl's book says.

rex; July 16, 2010 10:01 AM
JayWalk said...: I believe everything is printed up front in the application form where they offer a limited number of years' waiver of the subscription usually $70 for a basic card and more for a gold/platinum card. Once the "honeymoon" period is over, billing is as per agreement.

You cannot say that they took your money without first informing you since this particular charge is listed in your monthly bill prior to deduction via Giro (assuming you have it set up) or pending your cheque/transfer/payment,

I feel that it is the onus of the customer to check through his credit card bill which is usually sent out 15 to 20 days prior to due date. Otherwise, why bother to send out the bill if it is not for checking purposes?

p.s. $700 for subscription? Is that a typo?

p.p.s. I do not work for a credit card company nor a bank.

p.p.p.s You may want to take a look at CIMB credit card. I think they offer subscription waiver for life.; July 16, 2010 11:39 AM
SD said...: So did the bank acknowledge your fax?; July 16, 2010 2:12 PM
Tan Kin Lian said...: The annual fee is $700 for an ultimate card. As you can see, it is not a small sum.

If the bank is prepared to waive the annual fee, it is dishonest for them to bill the customer and hope that the customer does not complain about it.

Anyway, this type of banking practice is common, that many people felt that it is all right. The standard of honesty or ethics has dropped in recent years, due to the greed for more profit.; July 16, 2010 3:12 PM
rex said...: rex comments as follows,

I don't think it is "in recent years", Mr Tan..

I know that since 1994 (26 years ago, maybe even more), credit card issuing banks have the practice of giving the waiver of annual charges, if you just so much as to make a phone call to ask them.

They even credited me back the fees which they deducted in one year, after i phone called to ask them to waive.

In my opinion the regulator MAS shouldn't allow this what i call negative productivity activities. It serves no purpose, give no value add, wastes everybody's time, and is a cheapskate way for the bank to earn money - though i wouldnt use the term "honest" because everything is written in the invoice, you can't say they are violated any rules or broke any promises.

rex; July 16, 2010 5:07 PM