Bank of America vows to stop raising credit card interest rates through February
Filed under: Banks, Credit Cards
Here's the good news: Bank of America announced Tuesday that it won't raise credit card interest rates or fees before February, when a new law kicks in that's designed to reform the credit card industry.But as with just about anything with news about banks and credit cards, it helps to read the fine print. If you have a Bank of America card and are thinking, "Phew, at least things won't get worse between now and February," I wouldn't relax much.
As the Associated Press points out in a story that ran in USA Today, most Bank of America customers have variable rate cards, which are linked to the prime rate. So if the prime rate goes up, customers may see their interest rates climb.
And spokeswoman Betty Reiss told The Washington Post that the bank will continue changing interest rates on customers who are late on two or more payments. Obviously, those changes are going to mean the interest rates will climb and not drop.
Starting in February, however, the law passed by Congress and signed by President Obama will prevent credit cards from increasing rates on existing balances unless the card holder is at least 60 days late. So at least, starting in February, you can be a few days late, and then some, without financial ruin.
And it may be sooner than that. The House Financial Services Committee is holding a hearing Thursday on a bill that would make the credit card rules kick in on Dec. 1, instead of waiting until February 2010.
And while it helps to look at the fine print and not to relax too much, I do want to give credit where credit is due, no pun intended. Bank of America could take the path of raising rates and doing everything it can to gouge customers before these laws kick in, and it's not.
It seems to have received the message that America isn't pleased with how the credit card industry has treated its customers, and that should be applauded. Hopefully, other banks will take their cues from Bank of America, as some have with improving how they dole out overdraft fees.
Still, while the banks' newfound concern for their customers may be better late than never, it also falls into the too little, too late category. I'm guessing the 1.4 million people who are expected to declare bankruptcy this year would say that, anyway.
Reader Comments (Page 1 of 1)
10-07-2009 @ 9:45PM
rkeefe said...
If BofA has already done what all other banks have done,its a non issue. The smoke and mirrors game of not raising intrest on fixed accounts is a no brainer, like other banks they already made almost all of those accounts a v-intrest accounts. About the only credit card accounts this will effect will be their own top picks. So the little guy gets it again with no help.
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10-15-2009 @ 11:06PM
John said...
If americans want to bring the credit card industries to there knees all we have to do and i do mean all is stop using credit cards all together. Pay on your balances but stop charging. Yes the wheel will stop spinning quickly. And yes we will hurt also by not getting what we would like. This country is built on plastic. I bet there would be quick adjustments in rates to get the wheels moving again. WE THE PEOPLE have the power to do it, but we must stand united. If credit cards didnt exist how much would we really spend in dollars, after all most americans seem to live on pay check to paycheck. As long as we go to credit card companies for money they will have us by the WALLET. And yes i am guilty of this to. I think its time for a change. Wallstreet almost went down the tubes, but our goverment was there to stop it. So whos going to help us ?
Well it just might be ourselfs.I dont think this country could fuction if credit wasnt available. So the answer seems to be MAKE credit more affordable.
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10-16-2009 @ 9:29PM
shar said...
BOA sucks! Oh, goodie. They aren't going to raise interest rates on credit cards. I ljust got a letter today saying they are changing my line of credit (which they closed a year ago even though I've never been late and my credit has never been better) to a variable APR. I called to complain and ask why I did not have an option to opt out of the change to the agreement. I was told that they only have to give an opt out for credit cards and not for a line of credit. They have the right to make whatever changes to the agreement they see fit and there is nothing I can do about it. So now that going after credit card holders is a no-no, they are going after the other kinds of credit. Everyone watch out!
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10-29-2009 @ 10:45AM
Frank said...
You are correct.
I just received the same letter. I had never been late and I pay twice the minimum.
10-17-2009 @ 11:51PM
Robert Thomas said...
I opened up my BofA Gold Option Line of Credit back in Feb 08 to consolidate older lines of credit to a lower fixed rate to pay them off sooner. I was guaranteed that the line of credit would remain at a fixed interest rate for a set term of months and that was it. That was the only reason I opened the account.
In Nov 08, I called BofA and tried to negotiate a lower interest rate on the LOC, but was turned down. A few days later I receive a letter in the mail saying that "due to a periodic review of my account, it has been closed." My credit score is in the 740s, and I had never missed a payment on any of my debts! I can only assume it was because I called to negotiate for a better rate. I promptly closed my remaining accounts and moved my checking and savings over to a credit union.
Now it is Oct 09, and I have received a letter for BofA saying that my fixed interest rate will now be variable, tied to the prime rate. That is not the agreement I signed on for. I called to opt out of this outrageous change of terms, but was told that it was being done on ALL GoldOption lines of credit and nothing could be done about it. This seems to me to be a case of bait and switch. If I recall correctly, the new credit legislation going into effect soon affects fixed rate interest, but exempts variable rate interest. It appears BofA is changing their terms to circumvent legislation, and something needs to be done about it! The letter I received said the new variable rate takes effect on the first day following the statement closing date in December 2009!
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10-23-2009 @ 10:20AM
Ann said...
I agree completely - smoke and mirrors and shell games. Tonight I had a very poor experience with a petulant employee of BofA, "Corinne", who is an example of their customer (dis)service department. I had a huge rate increase and when I questioned it, they canceled the card altogether and claimed it was my fault. This "Corinne' kept repeating misstatements, talking over me, and refused to transfer me to her supervisor, a common ploy at B of A according to the many B of A complaint blogs. i will take this issue to the Attorney General in my state and wherever else I can make a formal complaint. B of A deserves to be prosecuted the same as any other mobster.
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10-29-2009 @ 10:45AM
Frank said...
This is a lie.
BOA just sent letters indicating that they will raise my rate. I had always paid on time and more of the amount, I make over $70K and owe BOA $12K.
Well, they consider this "high risk". Are you kidding me??
I am looking for another bank.
Prosper or Lending Group may be good alternatives, at least regular Joes will get my money.
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