Citigroup (NYSE: C) and Bank of America (NYSE: BAC) Cutting Affinity Credit Cards

Citigroup (NYSE: C), Bank of America (NYSE: BAC) and other large-cap banks are quickly moving away from niche-branded rewards credit cards as they become less profitable because of the tightened credit market and industry reforms from the Credit Card Act.

According to a new report from the Wall Street Journal, banks including Citigroup, Bank of America and JP Morgan Chase are cutting back significantly on the number of niche-appeal products that they offer. These cards are often associated with specific retailers, colleges or non-profits and other special rewards programs for their user.

“Co-branded and affinity cards have become too expensive as credit-card companies try to reduce expenses amid the surge in late payments and delinquencies by card users,” the Journal said.

Bank of America, based out of Charlotte, N.C., now has about 4,400 credit cards that are often pitched through college alumni associations, social groups, charities and retailers down from about 5,000 before the credit crisis.

Last fall, we reported that Citigroup cancelled several co-branded credit cards associated with gas stations. The company also cancelled a Home Depot branded credit card, because it “didn’t resonate with customers as we had hoped,” said Bill Johnson, who runs the bank’s card-partnership programs to the WSJ.

Banks across the country are cutting rewards programs and others are adding new annual fees in order to make credit cards profitable and make up lost fees which they can no longer collect thanks to new federal regulations.