Bank To Fine Cardholders For Paying Off Debt

Nationsbank of Delaware is preparing to impose a $25 annual fee on Blockbuster Visa customers who pay off their credit card bills each month.

The new fee is part of a growing trend in the credit card industry to penalize those customers who pay their bills promptly, in part because banks are making little, if any, money in serving them.

Company officials said 6 percent of Blockbuster Visa customers - those who carry no balances - would be hit with the fee. The officials declined to say how many Blockbuster Visa customers there are.

A similar fee was imposed last year on GE Rewards Mastercard customers who had less than $25 in annual interest charges. The move by GE set off a firestorm of protest.

U.S. Rep. Joseph P. Kennedy II, D-Mass., said GE effectively was penalizing those who pay their debts promptly, thus encouraging more spending and more debt.

For Blockbuster Visa cardholders who pay their bills each month, the card is a moneymaker. The card carries no annual fee and pays a monthly usage dividend in the form of “Blockbuster Bucks.” They come in $5 denominations and can be used to rent videos at Blockbuster stores with change returned in cash.

Sources say Nationsbank may have been losing money on these users.