Citibank waives yearly fee if you spend $2,400

Lola Felix does not have her Citibank credit card. She cut it up in several pieces and sent it back to the bank.

"I was just really incensed at the idea that they would do that," she said.

What got her so upset was a letter from Citibank saying her free credit card would now cost her $60 per year, but she would get the $60 back if she would just spend $2,400.

"I think it's ludicrous," said Felix. "If you pay me $60 and you spend $2,400 I might give you your $60 back."

Felix did not think it was logical at all to save $60 by spending 40 times as much. The bank's letter made it seem reasonable. It says simply use your card "for purchases you already make like gas, groceries, cell phone or cable," and you get your fee back.

"That's not their choice, it's my choice," she said.

She says other credit cards pay her rewards every time she spends, and getting her own money back did not seem like much of a reward.

"In a way it's penalizing people for not charging a lot on their credit cards, for being responsible consumers and managing their money well," said consumer counselor Dan Parrish. He says banks seem to be adding new fees now that credit card reforms ban some older ones.

Felix scribbled an angry reply on the Citibank letter and returned it along with her cut up card. She was not the only one. Several consumers complained to 7 On Your Side after receiving the same letter.

So we contacted Citibank. It did not waive the fee, but said, "Customers can be frustrated by new fees, especially in difficult economic times. However, this action is necessary given the increasing costs of doing business. We also recognize that customers are frustrated by complicated notices... that's why we are communicating... in a clear way and providing customers with greater choice.''

Which Felix took them up on.

"Close my account, and I'm going to report this to a consumer advocacy group. How dare you," she said. "I wasn't too nice, but it's very me."

The Federal Reserve is now considering a ban on inactivity fees -- those are penalties for not spending enough on your credit card. However, in this case, Citibank is waiving a fee if you do spend enough. The fed tells us it is not clear if this would be legal or not.

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