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Credit card companies want you to spend by their rules, and they're pulling out all the stops to get you to play along. But in the aftermath of the financial crisis, those rules are changing. With some cards, even getting in the door has become pricey.

Rolling out the red carpet
In an effort to snare new customers, card issuers have gotten creative with their offerings. Instead of simply bribing potential applicants with cashback rewards or frequent flier miles, companies are moving toward a pay-to-play model, with heightened service they hope will justify the high costs.

Once a pioneer in the trillion-dollar exchange-traded fund industry, Barclays (NYSE: BCS  ) isn't well known for its credit card business. Yet its Barclays Bank affiliate is targeting its Black Card directly at high net-worth individuals, aiming high with a whopping $495 annual fee. In addition to typical benefits like rental car insurance, the card will give holders what it calls "luxury gifts," universal access to airport lounges, and 24-hour access to concierge assistance for "personal needs" of all sorts.

Obviously, Barclays isn't the first to offer cards with significant annual fees. American Express (NYSE: AXP  ) has emphasized the panache of holding its cards, which carry fees ranging from $95 to $450. Those fees add up, representing more than $2 billion in annual revenue for the company.

So it makes sense that other issuers are rushing to join the party. According to The Wall Street Journal, Capital One (NYSE: COF  ) is pitching a card that offers double reward miles in exchange for a $59 annual fee, with the first year free. At $85 a year, JPMorgan Chase's (NYSE: JPM  ) Sapphire card simplifies point use by offering a flexible cross-program platform. Both companies are among those most exposed to delinquencies among their cardholders, although JPMorgan Chase finally started to see some relief in its delinquency rates in its first-quarter report. Nevertheless, it's clear that issuers are trying to move beyond the cyclical ebb and flow of interest income to try to lock in more stable sources of revenue.

Should you dance?
Unfortunately, it appears that this trend of declining free rewards will continue for some time. Recently, Charles Schwab (Nasdaq: SCHW  ) announced that it was discontinuing its fee-free 2% rewards card. A Schwab spokesperson told The New York Times that the card "was designed and modeled based on a very different economic environment than what we're experiencing now after the financial crisis."

Certainly, that's true from the card issuers' perspective. The recently enacted credit card reform laws have placed severe limitations on the ability of credit card companies to maximize income from those who carry balances on their cards every month. In response, card companies are looking for ways to get more revenue from those it considers "freeloaders": customers who pay off their balances every month.

Golden eggs? Who needs 'em?
What happens next depends on you and millions of other cardholders. For some people, the rewards that new premium cards will give them may outweigh what they have to pay -- and if you're one of them, then by all means, take full advantage. Yet keep in mind that if companies expected to lose money on these deals, they wouldn't do them. Paying hundreds of dollars up front is a big hurdle to overcome in comparison to the free cards that are still available, at least for now. Make sure it's worth the cost.

For many of us, paying for cards won't make sense. For now, there's no shortage of good free alternatives -- I still get offers every week throwing free miles at me. If those ever disappear, though, I won't hesitate to stop using credit cards. As long as card-issuing banks -- along with the merchant networks Visa (NYSE: V  ) and MasterCard (NYSE: MA  ) , who take their share via interchange fees -- are skimming billions off the top of huge numbers of transactions every day, I want my cut. If you try to cut me out, I'll walk. And I'm confident I'm not alone.

Are you with me or against me? What do you think about new credit card fees? Tell me all about it in the comments section below.

Tune in every Monday and Wednesday for Dan's columns on retirement, investing, and personal finance.

Fool contributor Dan Caplinger doesn't think "Charge Free or Die" is likely to show up on New Hampshire's license plates anytime soon. He doesn't own shares of the companies mentioned in this article. American Express is a Motley Fool Inside Value choice. Charles Schwab is a Motley Fool Stock Advisor selection. Try any of our Foolish newsletters today, free for 30 days. The Fool's disclosure policy has sterling credit and never asks for a loan.


Read/Post Comments (7) | Recommend This Article (8)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 28, 2010, at 1:32 PM, zgriner wrote:

    Hey, I'm there with you.

    I use CCs for convenience and rewards. If they start charging me for convenience, I'm gone - back to checks. I don't like debit cards because it's too easy to screw up. I like the traceability of a check.

  • Report this Comment On April 28, 2010, at 2:39 PM, zgriner wrote:

    Hey, I'm there with you.

    I use CCs for convenience and rewards. If they start charging me for convenience, I'm gone - back to checks. I don't like debit cards because it's too easy to screw up. I like the traceability of a check.

  • Report this Comment On April 28, 2010, at 4:36 PM, satinstitch wrote:

    I think the credit card companies are going to get this country out of debt and back on track. By charging all these outrageous fees and interest rates people are going to say "I've had enough" and go back to paying cash. Folks have had enough and they are looking for a way out. In a manner of speaking the credit card companies have pushed the unruly child out the door and made them be responsible for themselves. Can saving for our futures be far behind?

  • Report this Comment On April 29, 2010, at 10:35 AM, vidwiz20 wrote:

    Yep, convenience and rewards are the only reason to use CCs. Start charging an annual fee and I'm outta there.

    I would probably start using my debit card, though. Not too thrilled about writing many checks. Especially since my bank has a checking account with a nice interest rate, if you make a certain number of electronic transactions each month.

  • Report this Comment On April 30, 2010, at 1:31 AM, rlcato wrote:

    @satinstitch:

    You had me for a second there with your 'get this country out of debt' rant.

  • Report this Comment On May 02, 2010, at 10:07 AM, ckfinance2003 wrote:

    My card is paying me $10-$20 a month to use it and I pay it off every month. While they lowered my limit, they have not instituted any fees. Should they, I will be done with them. Credit card companies earned their keep from me in my more naive days and I'm not going back to that!

  • Report this Comment On June 15, 2010, at 7:47 AM, KatherinePaul wrote:

    I would probably start using my debit card, though. Not too thrilled about writing many checks. Especially since my bank has a checking account with a nice interest rate, if you make a certain number of electronic transactions each month.

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Dan Caplinger
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Dan Caplinger has been a contract writer for the Motley Fool since 2006. As the Fool's Director of Investment Planning, Dan oversees much of the personal-finance and investment-planning content published daily on Fool.com. With a background as an estate-planning attorney and independent financial consultant, Dan's articles are based on more than 20 years of experience from all angles of the financial world.

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