Thursday, April 9, 2009

Bank of America To Boost Rates On Cards With Balances


The Wall Street Journal is reporting what my readers knew some three days ago -- and as early as Saturday if they were reading my off-topic thread (hat tip to Carnap for being the first reader to bring the rate hike to my attention on early Saturday morning): Bank of America is lifting interest rates on a good chunk of its credit-card customers. The move affects customers who carry a balance and have an interest rate of less than 10%, the Journal reports.

From the Wall Street Journal (hat tip Don in SW OH):

Bank of America said it started notifying customers of the rate increases last week. "The increase on these accounts reflects the current economic conditions where our cost of providing credit has significantly increased," Ms. Reiss said. The average annual percentage rate on the affected accounts is 8.5%.

Consumer advocates see another motive. The banks "want to mess with people before they can't," said Ed Mierzwinski, consumer program director with the U.S. Public Interest Research Group, a consumer advocacy group in Washington, D.C. "Every day they can earn income at a higher interest rate is more profits for them."

Credit.com, an educational credit Web site, started hearing from customers complaining about Bank of America's rate change on Saturday, said spokeswoman Emily Peters. She advises customers to pay off their balances, if possible, but keep the card open since closing the accounts could hurt their credit scores. "The best possible option would be to leave the card dormant and use it every six months" to prevent the issuer from closing down the account, she said.

Regarding the comment made by Emily Peters, I think the card should be used more often than once every six months. Using a card once during a six-month period, in this credit environment, is a recipe for account closure. I'd use it at least once every three months. And once every two months might be even better. I have too much anecdotal evidence suggesting that six months is too long.

Anyhow, read the rest of the Journal's story here.

P.S., I'd be remiss if I didn't give a shout out to Hanadarko (a reader), who shared some of the nuances of the recent Bank of America offer with me.

77 comments:

  1. My BofA card has an interest rate of 10.9%. Looks like I'm going to get missed (I hope) phew. What will be interesting is what happens to my Citi 0.00% promo rate in August. It was advertised to convert to 8.9% when the promo expires. Any guesses on how long it will be after that before the rate gets hiked? Any idea how high?

    ReplyDelete
  2. Anon, your Citibank rate will immediately rise to the "go to" rate after the offer expires. It will be reflected on the first statement you get after the promo expiration.

    ReplyDelete
  3. It SHOULD go to 8.9% -- but it's difficult to know if the go to rate has since changed. You'd need to call Citibank and find out.

    ReplyDelete
  4. I rotate my cards and use them all at least every other month.

    My BOA rate was 5.9% and it went to 11.75%.
    So I opted-out and froze it.

    My mom's BOA rate was 7.99% and it went to 13.75% and she too opted out.

    ReplyDelete
  5. Hanadarko, so it was a family affair for you. Everyone got it. Bank of America says that less than 10% of its cardholders are receiving these increases.

    ReplyDelete
  6. My BoA card has a rate of 4.9%, and it has been that way since the day I got it 5 years ago.

    ReplyDelete
  7. Anon, did you get a rate-hike letter? If not, check in if you do. Would love to see if some readers dodge this hike.

    ReplyDelete
  8. Just another bizzaro world event. People who didn't qualify for the best rate aren't affected. People who did now have higher rates then the less qualified people.

    I guess I'm glad my credit wasn't that great when I got my BoA. I may skate through this unscathed.

    ReplyDelete
  9. Thanks, Brent Hunsberger, reporter at the Oregonian, for the hat tip:

    http://blog.oregonlive.com/finance/2009/04/bank_of_america_raising_rates.html

    ReplyDelete
  10. I got a letter in the mail this week that they are jacking my rate up to 19.90%. Needless to say, I am going to get a personal loan and shut them down. 20% is absurd. BOA can kiss my behind.

    ReplyDelete
  11. Weird, I have a BofA Amex with a >$10,000 limit and no balance. Also has a purchase rate of 7.9%.

    YESTERDAY I received a batch of credit card checks with a 3.9% tease rate until December. But I read the fine print and BofA claims that after the teaser rate, it would go to the standard purchase rate of 7.9%. No mention of a rate increase.

    Of course, if I actually USED these, that's when the rate increase notice would show up :)

    ReplyDelete
  12. I'm hoping that I dodge this - Premier Banking client at 5.15%.

    They recently fired a whole bunch of the Premier Banking consultants & financial advisors (and most of the ones that didn't get axed left). They are apparantly migrating the Premier business into the Merril Lynch business... so I'm guessing (hoping) that they treat the Premier clients that haven't yet bolted with white fuzzy gloves.

    My (former) financial adviser moved to a competing bank and has reached out already. If they mess with this rate, it will be enough to make me consider moving all of my investments & banking.

    ReplyDelete
  13. Anon, you might just avoid this. Maybe because you're a PB client you won't be targeted. If you are affected, at some point, be sure to check back in.

    ReplyDelete
  14. more information:

    My 4.9% card has a limit of >$10,000. I usually charge less than $100 a month and always pay off the balance. It is my only card with them and I have no other accounts.

    As of this morning the balance is still at 4.9%

    ReplyDelete
  15. BofA is targeting customers with rates below 10% AND have a balance.

    What I want my readers to keep me up to speed on is this: if you get a rate hike and you do NOT carry a balance, let me know!!

    ReplyDelete
  16. Some time ago I did a BT with them for $10k at prime + 0% that guaranteed it for the life of the balance (currently ~3.25%), i have a pancaked balance of $1k on top of that at 11.24%. Hopefully the rate hike won't affect me.

    ReplyDelete
  17. Chris,

    good luck with that one! Chase just upped its "rate for life" balance transfers.

    Ouch the issuers sure seem to have us by the short hairs. I guess that is what we get for years of not even reading, let alone objecting, to changes in terms that are snuck in with monthly statements.

    ReplyDelete
  18. I just got the APR increase notice in the mail yesterday. I have $5900 balance so there's no way I'll accept the new APR which is at 15.4%.

    ReplyDelete
  19. First post, longtime reader.
    I received my BOA rate increase letter yesterday. I generally do not carry a balance (exception being several times a year when I have to buy presents and pay off higher balance over 2 months).
    APR going from fixed 9.9% to new variable rate with margin of 11.74% (example: end of February the index to calculate variable rates was 4.00 percentage points, hence APR 15.74%).
    Irritated, but don't really care because I don't usually carry a balance. Will use different card for major purchases.
    Card at same rate for 11 years (until now) - remnant from college years.

    ReplyDelete
  20. Anon, first things first. Thanks for being a long-time reader and first-time poster. I always enjoy seeing comments from my readers.

    As for your card, wow. You've had that sucker for quite a while. As you said, when you do have to carry a balance, you'll have to reach for something else.

    Sign of the times. Hopefully, when things finally settle, there will be some low-interest-rate options left. :)

    ReplyDelete
  21. Hello, I have been reading your blog for a few months. I clicked on it from another blog and now I have it bookmarked.

    I got the notice last week as well. Right now I have a balance with BofA at 0% that I transferred last year. It is about $1200. In October it was supposed to increase to 9.9%

    Is my rate going to stay at 0% until then or will I start getting finance charges now? I am afraid to call them because I don't want my account flagged. I will be buying a house in the next 12 months.

    ReplyDelete
  22. South Texas, if you are currently in a promotional deal (at 0%), your deal should not change until October. Are you suggesting that you got a letter saying that your rate is being hiked? It shouldn't be. You had a contract with Bank of America. It says that if you perform a certain way (no over the limit, pay the minimum each month, and your payment is not rejected for any reason) that it will leave you at 0% until October.

    ReplyDelete
  23. I know I've whined on this before, but "Credit.com, an educational credit Web site" is no such beast. It's an affiliate marketing site, with questionable and biased recommendations. I sure wouldn't give any credence to anything their spokesperson says.

    ReplyDelete
  24. Too bad, tax payers bailed them out and this just how they want to payback tax payers! They must be smarter.

    ReplyDelete
  25. I still can't decide what I want to do with this card. Since opt-outing won't hurt my credit score, I may just do that for the moment. But at 12% this card really is not worth having. So, I may apply for a new card. I've seen some of your recommendations, but have you made a post about such?

    By the way, how much do credit pulls usually cost you in terms of your score?

    ReplyDelete
  26. Carnap, I have not written any recommendations, for the most part, on this site. The Penfed card I have written about. That might the closest I've really come to a recommendation. Oh, and that Schwab card I wrote about several months ago.

    I lose about 5 points for a credit inquiry.

    ReplyDelete
  27. I think this change will affect more than 10% of it's customers, unless they're not counting credit card companies housed with B of A, though they should since the same thing is happening to them. The credit union I work for has our credit card portfolio with FIA Services, a subsidiary of B of A and our customers are getting hit with this increase, too. Even the employee cards are having the rates jacked up.

    I heard somewhere that B of A is posting a good figure on returns last quarter (don't know for sure as I haven't looked at the financial), and if that's true, then I'm inclined to agree that this is about making more profit as opposed to recouping losses in the cost to provide consumer credit. Other companies seem to be getting by with their lower rates (knock on wood).

    ReplyDelete
  28. I think I got the same letter everyone else did. I think what I will do is see what my next statement says, and if they are charging me interest I will just pay it off. I was really concentrating on another card right now, but I could toss my snowball at the BofA for a few months instead. I want them both paid off before August anyway.

    ReplyDelete
  29. South Texas, let me know what ultimately happens. Check back in next month.

    ReplyDelete
  30. Ouch!!! I finished grad school a couple of years ago and put most all of that, and an emergency medical surgery on to 7 credit cards. Long story short I paid that down to 4 cards and then to three last month.

    I still have about $35,000 in debt on 3 cards (all with B.O.A.), but I have never missed a payment to anyone, never made a late payment to anyone, never been over my balance NOT once. My credit has actually always been pretty good and gone up as I have paid off so much debt over the past couple of years. You guessed it, I got whacked and my 4.99% card is going to 12.24% My 8.99% to 16.99% and my 9.99% card to 14.25%. No rhyme or reason. Nonetheless, here is my advice to everyone. DO NOT CALL BANK OF AMERICA and try to renegotiate, or even ask questions.

    I went to a branch, they got me on the phone with a few different people mainly I was asking for some explanation. The response was belittling, retaliatory and punitive. I was informed that despite never violating any of the contractual provisoins of my agreement I SHOULD EXPECT ANOTHER RATE HIKE SOON, in addition to the one I received notice of on Wednesday! The second and third people I spoke to denied that, but call me a little jaded for believing the first person. The other thing they did when they got frustrated with me was to tell me that righ then and there they were cutting each of my credit lines by several thousand dollars - each to within in a couple hundred dollars of the limit, effective immediately. I had to rush off the phone to call my wife to tell her not to pay the power bill or anything on the card so as not to mistakenly go over the limit.

    My wife said I should call back in to discuss how I was treated - I aske if she was nuts. What could another call possibly yield? Bank of America cutting my credit line below my balance to manadatorily put me in default??? Raising me to the default rate anyway, despite no triggering event? There is really nothing keeping from doing that.

    Sorry to drone on for so long, but any suggestions - this was the worst financial kick in the teeth I ever took. And I have gotten some good ones.

    ReplyDelete
  31. Wow, a lot of good posts (threads)!

    ReplyDelete
  32. My sister got this letter. She was at 7.99% and they were jacking her to 13.99%. She called them BEFORE I had a chance to tell her what to do...

    The rep said they could OPT HER OUT, but how about she apply for a new card at 9.99% instead...

    WTF ?

    So my sis said OK and started the app.
    Once the BoA rep found out my sister lost most of her hours and pay, they IMMEDIATELY lowered her credit line on her current account, to $1k over her current balance - which will no doubt DING her FICO.

    Yea, its our fault for carrying balances but this is just not right and they keep getting away with it. I suspect most of this crap they are doing is that they can get away with it NOW - until July 2010 I guess.

    ReplyDelete
  33. Hanadarko, this is one of the reasons I say to stay off the phone -- especially when it comes to Bank of America. These reps are trying to learn as much about a customer's current situation as possible when they have them on the phone.

    She knows that now. But for others: be careful out there.

    ReplyDelete
  34. CreditMattersBlog,
    I got the letter and my rate is changing from 7.74% to 13.74%, I am not carrying a balance right now. My due date also changed from the 16 or 17 to the 13. It was just changed with a note at the end of February's statement, it could have been very easy to miss.
    My credit line is $26,400 and I charge about $3,000 every month and pay it off at the end of the month, at least half of the time. I don't think my balance has ever been over $8,000.
    I have used this card exclusively for several years, have never been late with a payment. I have other cards that I never use and I am not sure if it would be best for me to just start using another one, and just not use BoA right now, or is there any chance of negotiating the rate back down?

    ReplyDelete
  35. AK, if you do call BOA, be careful. Plenty of reports of people calling in only to have things go downhill even worse.

    If you accept the rate increase, just be sure that you pay this card in full each month. Interest of 13.74% is a lot when you're carrying a balance.

    If you have other cards (with lower rates) -- and you want to carry a balance -- those might be better for that purpose.

    ReplyDelete
  36. Just got the letter in the mail the other day. I believe the new rate is 13.69%. Small balance- just a couple k, but time to pay it off.

    ReplyDelete
  37. Anon, everyone will be happy. You'll pay it off (no more interest payments) and BOA will be happy. Paid in full.

    Congrats on the pay off.

    ReplyDelete
  38. I got a letter today that increased the fees on Cash Advances, balance transfers, etc to 4% from 3%.

    No change in APR though-weird, they send me checks 2 days ago and then do this. Only makes me less likely to actually USE the checks :)

    ReplyDelete
  39. "These reps are trying to learn as much about a customer's current situation as possible when they have them on the phone."

    Yep. Everything thinks the companies are so horrible because of this, but the reason why they do it is because of asymmetric information! People BS to them all the time and they have to use clever methods to try to get out the information they want. The problems that are created from asymmetric information are perhaps some of the most interesting in economics.

    This is done so many places that its sad that there is not a greater understanding of it. For example, in health insurance the high deductible HSA plans are cheaper than standard plans even under the worst case situation (you have to pay the full deductible for the year). There is absolutely no reason to apply for the other plans! Yet, they exist and many people use them. But they only exist as a mechanism for the insurance company to find out information about your health.

    I would not be surprised at all that a lot of what is going on is based in part on the lenders trying to get information about your true financial system. The people that complain the most are precisely the one that are trying to hide things from the lender. If you call all angry about a rate hike that you can opt-out of it says a lot about your financial situation.

    Americans have become so credit addicted that they think credit is some right and taking away your limit is liking stealing money from you. Its odd, yet amusing.

    "Yea, its our fault for carrying balances but this is just not right and they keep getting away with it."

    Getting away with what? Cutting limits on people that have reduce income or raising rates because of changes in the credit markets?

    ReplyDelete
  40. By the way, I called them yesterday and everything that was stated here was accurate. The way she phrased it was that "Since this may be people's only card we keep the card open so they can still use it for emergencies and things like that". I did not reject the rate increase yet though, I just wanted to make sure that the things stated here were correct = )

    She also reminded me towards the end of the conversation that if I reject the rate increase to make sure to stop any automated payments for services.

    Overall, I thought they were rather pleasant.

    ReplyDelete
  41. Carnap, I always assume that my readers will trust my work -- but verify it. So, no worries there. I'm glad that my information was accurate.

    And, yes, good advice on making sure that the payments you have on autopilot are stopped. That's an easy way to opt in if you miss one of those.

    ReplyDelete
  42. I think this move is in response to the pending credit changes coming in 2010. To tell me that its too costly to give money and not make any money at 7.99% is crap. The money they need to pay merchants we use is at an all time low.

    Now, to be fair - I have no issue if they change terms MOVING forward on NEW Balances, but my balance from years ago is another story.

    The changes pending are great, but too little and too late.

    Companies can and should be allowed to change rules based on so called 'market conditions' - but only against FUTURE charges....not ones from years ago..

    I am surprised we can use BOA and pleasant in the same sentence. However the 2nd guy I talked to was nice. The 1st one was beyond jackass status....

    ReplyDelete
  43. "To tell me that its too costly to give money and not make any money at 7.99% is crap. The money they need to pay merchants we use is at an all time low."

    This is not accurate, currently the default rate is almost 9%. Why would the yields be at all time lows when the default rate is increasing dramatically? Yields on credit card ABS are not the same as the prime rate, libor etc. Yields on credit card ABS will go up as charge-offs, etc increase as investors will demand high yields to compensate for the increase in defaults.

    If Bank of America could truly make money at 6~7% right now, why increase the rates? Did the lenders have a big meeting together where they decided to collective screw every? If so, why now and not before?

    Not allowing credit card companies to change rates on current balances will cause a lot of trouble given the length of time one can carry a balance on a credit card. If forced into this the lenders will start to use whatever techniques they can to get people to pay off the old balance.

    People's ideas about how credit cards should work are start out of the USSR. There is no free lunch, force their hand in way one and they will either close up shop or figure out a way out of it.

    ReplyDelete
  44. Carnap,

    I agree with a lot of what you had said BUT-when someone signs up for a balance transfer rate that "is for the life of the loan"-then that is what it should be. PERIOD.

    That borrower's decision was based on a constant rate for an indefinite period. They should be able to count on it.

    What if your mortgage suddenly went from 5.5% to 11% on the existing balance? You likely wouldn't be able to afford your home!

    ReplyDelete
  45. I didn't see anyone say that their balance transfer -- that's for the life of the loan -- is seeing a rate increase.

    If someone has that scenario, then there is a problem. Chase is being sued for lifting rates on deals that were supposed to be for the life of the loan. Breach of contract.

    Unless I missed it, I didn't see anyone in this thread say that a balance transfer, with a guaranteed rate, was being hiked.

    ReplyDelete
  46. "If Bank of America could truly make money at 6~7% right now, why increase the rates? Did the lenders have a big meeting together where they decided to collective screw every? If so, why now and not before?"

    Carnap, I couldn't agree less with most of what you say. First, card companies draconian unilateral changes are acutally precipitating the increase in default rates by intentionally pushing people over the edge precisely when the economy is so bad.

    Furthermore, it is only in the credit card business where such ludicrous contracts are made to where one party can unilaterially change the terms for no reason other then their own perogatives. Doing it on further expenditures is one thing, but the ability to go back and change it for charges and balances that were accrued under the prior contract terms is really amazing. Bascially BOA is making these changes to people who have not violated the agreements??? Effectively they are saying here are the terms, but if you utilize these terms, there is a punishment for such. Effetively it is a bait and switch - otherwise limit the credit lines in the first place. No one else is allowed to contract like this in civil society.

    The reason the credit card companies can is due to millions of dollars in lobbying. They spent 40 million plus in DIRECT lobbying to Congress in 2005(?) on the "Bankruptcy Reform Act," so they could institute or continue further practices such as this. That is $75,000 per Senator and Rep. what did they get for it, removal of certain bankruptcy protections - these are the same idiots who WANTED to give credit cards to people who had recently declared bankruptcy under the new law, for the sole purpose that the couldn't decalre again soon.

    Card companies constantly rangle about how THEY should not have to take the hit in write offs for poor decisions of stupid 'little guy' debtors who spend beyond their means and can't afford to pay them back based on their poor decision. How's about the shoe go on the other foot and the card companies pay for their stupid mistakes of over extending unsecured credit to those who shouldn't have it RATHER than using ludicrous unconsionable, in my opinion likely illegal, contract provisions to pass on the costs for the card companies poor decisions to customers who have not done anything to violate the credit agreements.

    ReplyDelete
  47. I got a BoA rate hike, and although my starting rate was less than 10%, I don't carry a balance (but I paid a lingering balance off just 3 - 4 months ago). My favorite part of the change in terms letter is the clause that of course I can refuse the change in terms ... but any new activity on the card will be treated as acceptance of the new terms and the rate will go up at that point.

    Can't stand these jerks, especially how people will blame themselves for being screwed around and respond with, "Well, I guess the card company has to make a buck..." or "I guess I'm not a good money maker for them because I don't carry a balance/my limit isn't high/I can only make minimum payments." Any time you use that card, they make money. Any time you don't pay the balance in full, they make money. They're making money hand over fist, and just seeing how far they can push it, in my opinion.

    ReplyDelete
  48. BOA may be saying its become too expensive to offer these low rates, I would challenge that. Cost of Funds for the credit card issuers with implied government backing has reached an all time lows. Right now Cost of Funds are sitting somewhere between 1% and 3% depending on the portfolio makeup. This CIT came more from the impending changes brought on by UDAP. If this had been about roll rates or worrying about the economy it would have been done some time ago.

    ReplyDelete
  49. BOA just cut my credit card limit from 20k to 10k and when I called them to see what's been going on representative said "it wasn't a credit-based decision, you weren't using much of the line". Huh? Yes, I never have more than 100 bucks on that card, but still don't get what's going on with them. Will try to talk to higher up account specialists later

    ReplyDelete
  50. bugabuga, good luck with going higher up. By the way, I wrote a story the other day about BofA's Twitter branch. David Knapp handles questions there. One of my readers had an issue with BofA recently slashing his limit. My reader pinged David Knapp at BofA and something was worked out.

    You might give David a try.

    http://www.creditmattersblog.com/2009/04/have-you-visited-bank-of-americas.html

    See the comments at the end of the story.

    ReplyDelete
  51. ""is for the life of the loan"-then that is what it should be. PERIOD."

    Well they may have said its a "for the life of the loan" but what did the fine print say? I've never actually seen the terms and conditions of one of these offers so I have no idea. But if they are changing them, then obviously there was some caveat in the fine print.

    ReplyDelete
  52. "First, card companies draconian unilateral changes are acutally precipitating the increase in default rates by intentionally pushing people over the edge precisely when the economy is so bad."

    There are multiple things going on right now, certainly part of the rate hikes (specially the dramatic ones) is the lenders responding to the regulatory changes. But rates would have gone up regardless due to the conditions in the ABS markets.

    Also, why in the world would the banks intentional push people over the edge? That makes no sense. They are responding to both the regulatory changes (that are very supported by the general public!!) and changes in the credit markets.

    "Furthermore, it is only in the credit card business where such ludicrous contracts are made to where one party can ..."

    I don't see the problem, this is exactly what people sign up for! Its all spelled out in the fine print. They can change your rate, limit, etc whenever they wish. If you do not like it do not use them. The government has no place in trying to force particular terms.

    The only thing I think is required is better disclosure.

    "...what did they get for it, removal of certain bankruptcy protections..."

    This has little to do with the issue at hand. The old bankruptcy laws were a bit unfair to lenders, but the new ones are biting them in the rear.

    Also, every business will try to pass loses regardless of the reason for the lose off to customers. This is nothing new, this is business as usual.


    I just hope that Americans learn the real lesson here. Debt = Slavery.

    ReplyDelete
  53. Nice blog you have here, I have enjoyed going back and reading some of the back articles. Long time B.O.A. customer with some substantial balances from law school which I have been wittling away at over the past year and a half. Never been laste or missed a payment ot anyone. I consolidated debt on to a couple of high balance low APR bank of america cards because I thought they were the most stable - read least likely to be pinched so tight they had to pinch me.

    I have reasonably high credit scores, 720, and the only reason it is low was due to a lot of revolving debt. I got the rate jacks ups from the mid single digits to the high teens. My credit may be lower now because the supervisor I spoke with was the persona of rudeness and informed me he woudl be cutting my lines significanty. I said go ahead, I am opting out because all I am doing now is paying these cards off, but on a humorous side as and attorney I really like this atmosphere. Having nothing to do with work, I don't practice consumer law, but if this keeps up, finally America will have a vocation they hate more than lawyers. THANKS BANK OF AMERICA! That is worth more than a few points drop in my FICO score to me.

    The Legal Begal

    P.S. My letter of April 2009 noted the prime rate was 4.00% on February 27, 2009 - I thought it has been 3.25 since before the beginning of the year? No worries, I am opting out anway, but I was curious if anyone knew off hand.

    ReplyDelete
  54. The prime rate has been 3.25% since December 16, 2008. Not sure what BOA is up to.

    Thanks for visiting the blog, Legal Begal.

    ReplyDelete
  55. Prime rate data:

    http://research.stlouisfed.org/fred2/series/PRIME

    ReplyDelete
  56. Creditmatters, thanks for the heads up and link date re: the prime rate. I checked my letters and that is what each one says "4.00%," but I will say for clarification that the representative(s) I talked to said my rate hike would only be to .75 less than my letters indicated should I choose not to opt out. I.e. effectively meaning with a prime rate of 3.25%.

    BugaBuga,

    you noted "BOA just cut my credit card limit from 20k to 10k and when I called them to see what's been going on representative said 'it wasn't a credit-based decision, you weren't using much of the line,'" humorously enough, I was told they were cutting mine - on two different lines - for utilizing too much of my balance. Pretty laughable, I think B.O.A.'s "financial position is strong" possibly in the same way Lehman Brother's and so many other was up until moments before they declared bankruptcy.

    Legal Begal

    ReplyDelete
  57. Under the amendment the letter states:

    "...As of February 27, 2009, the index used to calculated your variable rate was 4.0..."

    In the "How Your Variable Rate Will Be Calculated" section it states:

    "...and is the highest US Prime Rate as published by in the "Money Rates" section of the Wall Street Journal at any time within the immediately preceding three months".

    The US Prime Rate was 4.0% the first half of December which is within 3 months of February 27, 2009.

    So, they aren't up to anything. They just aren't necessarily using the current US Prime Rate.

    But this means by the time these new rates kick in they should be .75% less.

    ReplyDelete
  58. Got the letter from BOA on saturday... I called them immediately to discuss the percentage hike. I have had the card for 5 years, but have a $2500 balance transfer sitting on my account at a zero percent rate. They told me as of May 1st, this would hike to 14.99%. I let them talk me into the 9.99%, so my account wouldn't freeze, even though i will be paying it off and have no intentions on using the card to carry any large or small balances. Basically, they can say goodbye to any extra money from me. Thanks skank of america!

    ReplyDelete
  59. I have an interest rate of 11.99% and they are increasing it to 19.99%. I owe less than $3,000 out of my $10,000 credit limit. Never been late on any of my accounts and always but always pay at least double of the minimum...I even checked my credit score in all three bureaus and all is OK and paid on time, never late payments..oh well I guess I will be opting out tonight

    thought it was for those with less of 10% :(

    ReplyDelete
  60. Yep. That's what the bank says. Customers with rates less than 10%. Maybe you're receiving something that's not part of the recent batch of letters that went out. That's one explanation. On the other hand, we all know that the banks tell the truth -- all the time (smile).

    ReplyDelete
  61. Yep, I have an interest rate of 9.99% fixed and received the same letter. I called BoA last week and was livid with the rep, who would not give me a legimate "why" behind the rate increase, despite paying ontime & excellent credit score. They don't care. I told BoA that are going to systematically put themselves out of business. Folks, just stop complaining and go with the competition. I plan to setup a new card with Pulaski Bank...8.0% fixed APR for their Gold Card and no annual fee. It's a no-brainer. Trust me, BoA just shot themselves in the heart with this move.

    ReplyDelete
  62. I too got the letter of rate increase after something strange happened on my BofA card. I got an E-mail asking if I had made a purchase of 1.00, yes one dollar from something called Napster. I replied no. BofA cancelled my existing card of 13 years at 5.99%, sent me a new card with different card number. (who steals a credit card for a buck I thought)wierd. 3 days after activating the new card I got the letter. I called to inquire why and was told "You have outstanding credit, but we are doing it to everyone" I asked why and got no reply except that I could op-out. I did. Yesterday I got a letter reducing my credit line from 25K to 14K. I've only carried small balances the last 3 years because BofA told me back then that they could'nt make money on my account if I continued to pay it off monthly. Payments went like this: charge 3K pay $1500.00. charge 1K pay 2K....and so on....What a fool I feel like trying to help them out!...my next payment will be full payoff along with a cut in half credit card....so long BofA

    ReplyDelete
  63. I received several offers from BOA to use their checks on my account in the past months. Funny I have two cards with them one has a balance the other does not. The checks were from the one with the blance. Guess what they raised my rate from 9.99 to 25.99% on the one with the blance. I called them and they had no specific reason other than they are raising rates. She told me I could opt out and payoff the card. I asked would that close my account and hurt my fico. She replied no. Yeah I believe that! I'm looking for a way to pay off the card.

    ReplyDelete
  64. The customer service agent was correct, by the way. If you do opt out, the account won't be closed. You just can't use the card. If you do use the card, you're accepting the rate hike. If you opt out, you can pay down the balance at the old rate.

    Here's my story on the situation:

    http://www.creditmattersblog.com/2009/04/bank-of-america-raises-rate-on-card.html

    ReplyDelete
  65. Got the BofA letter changing my rate from 4.5% to 12.44%

    Opted Out! Who needs them.

    ReplyDelete
  66. Carnap has some legitimate points. Keep in mind folks, that a lot of credit card loans (an asset for BOA) are sold into securitizations. If the riskiness of the underlying loan has risen, the investor will demand a higher yield. For example, they may ask for a 12% return. The securitization is structured to provide a buffer to ensure that return, but as charge offs tick up it eats into this excess, bringing it ever closer to what they must provide to the investor. One way to go about fixing this is through repricing. (which is what most all card members have done).

    I am not making an excuse for how things work in the credit card industry. I agree with most here, in that they should have the ability to reprice FUTURE charges, but not reprice past charges. And I agree that these guys have been in the pocket of legislators for much too long.

    ReplyDelete
  67. Fiscalwonk, thanks for the post. I pride myself on knowing my readers. You're a first-time poster, correct? Welcome!

    ReplyDelete
  68. This is part of a letter I wrote to the CEO and I have also posted it on several message boards. I also have wrote to congress. I am hoping others will take the same approach. I find the practices of Bank of America to be unethical..............

    April 09, 2009


    Bank Of America Corporate Ctr.
    Attn: Mr. Kenneth D. Lewis, CEO
    100 N. Tryon Street, 18th Floor
    Charlotte, NC 28255

    Dear Mr. Lewis,

    I’ve been a long-standing loyal customer of Bank of America since 1994. I possess two credit card accounts with the Corporation. I recently received my monthly statement for account 0000-0000-0000-0000, When I reviewed my account I had noticed a considerable increase in my interest rate. I called Bank Of America at 1-800-421-2110 and inquired on the drastic increase in my interest rates regarding the above mentioned account number. At that time I was informed that a letter had evidentially been sent out in November of 2008 increasing my Daily and Annual FIXED Percentage Rates to a much higher “VARIABLE” rate. I didn’t receive this notification or I would have promptly closed my account with Bank Of America. I’ve made several attempts in addressing the current rate increases with Bank Of America’s Customer Service team, regretfully this matter remains.

    ReplyDelete
  69. May Bank of America burn in hell! They are picking on the hardworking taxpayer after taking money from the taxpayer. Horrid what's going on here...

    ReplyDelete
  70. I've been with BoA for 6 yrs. I had 2 cards with them. I closed one acct. 3 yrs. ago because they would not give me a lower interest rate. I have never had any missed or late pmts. on any acct. Late 2008, they cut my credit limit by $2400. Now they are raising my interest rate from 8.24 to 24.99. In my notice and also when I called BoA, they said it was because my credit. I had pulled my credit report that same day - it showed all accts. pd. on time and as agreed. The agent then told me if it wasn't due to my credit, it was because of the tough economic conditions and they had sent the same notice out to several thousand other customers. Was that supposed to make me feel better about the increase, because everyone else is getting whacked right along with me????????? I'm not sure why they tried to use my credit for an excuse, either. I opted out

    ReplyDelete
  71. The bill came and is still at 0%. I am relieved. Only $1,000 left to go on that one, and I'm sure I can have that paid off by August.

    ReplyDelete
  72. Well I'm in with the group now. Bank of America increased my business account from 12.74 to 24.74 and told me to bad. I closed the card down when they sent me the letter but was told you can't op out of the rate increase. I have never paid them late and have a good credit score. We give the govt taxes, they give the money to the bank at 0% and raise the customers rates 100%. This bank stinks and this is just under loan sharking. What do we do? Allraj

    ReplyDelete
  73. Bank of America increased my interest rate on my business card to 24%, never late ,good credit score. My original rate was 12.4, this is a 100% rate increase. We pay taxes, the govt gives are money to bank of america at 0% and they charge the customer 24%. This is one step below loansharking. We need to file a class action lawsuit against BOA. This bank is trash, what is the govt doing to stop this. If anyone has the answer let me know. I cancelled the card and they still raised the rate. I need to get rid of this card and Bank of America. Allraj

    ReplyDelete
  74. I'm with raj. We've had a cc acct. with BOA #30K credit line since 1994. Put $8K on it 18 months ago, now down to $6,500, never a late payment. Agreement at time was 8.99% fixed for term of the loan, suddenly went to 17.9%. Interest went from $55 to $115 per month - what the minimum used to be. I've written the President, the bank, and my congressmen and every blog site I can to spread the word. Hope someone or some group is powerfull enough to stop this.

    ReplyDelete
  75. BEWARE to all. Bank of America will take your information and use it against you! I called them to see if I could lower my interest rate since I have been a customer for over 10 years who pays my bills on time every month and what they did in return was cancel one of my cards and lower the credit line for the other two. I went from a 10,000 line to 1,000 because I am a full time graduate student who is not working full time so that I can better my future! Since I make less money then I used to they penalized me for that. I am very dissatisfied and encourage everyone to file a complaint with the BBB. Going to a new company who actually cares about having a GOOD customer!

    ReplyDelete