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.