Bank of America boosting credit card rates

The Wall Street Journal is reporting today that Bank of America is increasing its credit card rates on 4 million of its customers who carry a balance beginning in June. This comes as several other credit card issuers including Citibank, AmEx, and Chase have hiked their rates in recent months to shore up their ugly balance sheets and get customers to pay down their debts. Chase recently retreated on its $10 monthly surcharge for customers carrying a balance after public outcry and a spate of lawsuits. 

BofA wouldn’t confirm for us that this action will affect 4 million customers, but spokesperson Betty Riess said that it would hit fewer than 10 percent of its customers who are “underpriced relative to market conditions.” The customers chosen for this rate hike are ones who both carry a balance and have low APRs—averaging 8.5 percent currently. Their rates will now rise into the low-to-mid teens. 

BofA customers who are impacted will be allowed to opt out of the changes and continue paying down their balances at the old interest rate, provided they make no new purchases and continue to pay at least the minimum monthly payment by the payment due date. The changes go into effect on customers' June statements.—Chris Fichera 

Comments

[norbert]

Thanks for giving the heads up on this.

After reading this, I contacted BofA and they confirmed that they will be raising the rate on my card from 7.24% to 12.24% (yes, almost DOUBLE) as of 5/27/09.

So not cool. :(

[Greg]

A BofA customer service rep told me that most customers with balances have or would be receiving such a letter.

[Jacki]

I just received the letter from B of A upping my rate from 7.9% to 13.65% using a variable Rate formula with a margin of 9.65%. I will pay off the balance and no longer use this card for purchases or anything else. How come we gave the banks all of this TARP money and those of us who handled our credit wisely are being punished with higher rates? Not fair....

[Mark]

It doesn't surprise me in the least that banks would raise their credit card rates. After all, what better way to pay back loans from the citizens than to charge the citizens more for conducting business with the bank.

Even God only wants 10% of your money.

[Outraged Consumer]

I do not have a 'relationship', other than a credit card, with Bank Of America. For everyone who has a relationship, checking or other investment with them, please shop around. I have a retirement account with Chase, linked to my 2 credit cards with them. They have not yet tried to raise my interest rates.

I opened an American Express Credit card, at a fixed 9.9 % for purchasees and cash advances, with MBNA about a year before it was sold to Bank of America. The account guaranteed rate unless the account was late.

I charge about $400 a month and almost always pay the account in full,never extending a balance more than 2 months. I was "late" with BOA once, when they changed the Due Date from 1 day before the billing date to about 10 days before the billing date. I wired the money late in the day on the new due date, paid $15 for BOA's wire fee and was still charged late fees - it cost a total of about $60 for the privilege of paying by wire and having the new BOA due date. That was over a year ago.

Since then I have received 2 BOA letters of changes. The first wanted to change my cash advance rate to 21%. The notice also changed terms to 'can change at any time for any reason' with no opt out option. I rejected the interest change.

Yesterday I received a binding notice that the account was being changed from a fixed rate to a variable rate of prime plus some percentage, currently bringing the rate to 15.65% The opt out option is to close the account. The new rate is 60% a increase.

BOA is not getting rich on my business but say I charge $5000 a year with them a year They are making anywhere from $100 to $150 on fees they charge the merchants.

I am fortunate to have no credit card balances but this is still outrageous, greedy and immoral. It is a 'tax' levied by these corporations for their self imposed problems while the tax payer saves them from their own maleficence. Congress needs to know your opinion. Please exercise your civic responsibilities and protest with them

[World of Credit]

There seems like no escape for cardholder who carry a balance, no matter who the issuer is.

If carrying a balance for your credit card is treated like a sin, then perhaps the issuer is expecting the cardholder to treat a credit card like a charge card, i.e. paying your balance in full every month.

If you wish to transfer your balance to other issuer, perhaps you're out of luck. Most of them are freezing the 0% introductory apr on balance transfer.

In fact, you're lucky nowadays if you're able to open a new account with any credit card issuer.

[Debbie]

Last June my husband had a stroke. Due to the urgency of the situation, while he was in the hospital, I forgot to pay the monthly bill. I realized it less than a week later, and went on line to make the payment. That's when I noticed they had tacked fees and late charges on that took me over limit (which incurred more fees) and wanted a payment twice what I would have been paying.

When I called customer service, I calmly explained the situation, told them it was an oversight, that my husband was in the hospital, that he would be returning to work in 6-8 weeks or so, etc. All I asked was for them to take off the fees so the balance would go under the credit limit and lower the payment for ONE TIME only so we could get back on our feet. I reminded them we had the card for years and had never been late before.

My request was flat out refused by a rude service representative, who demanded I pay the entire amount due . I asked to speak to a supervisor and that request was also refused. I promptly closed the account.They also raised the interest rate to 29.99% for 6 months. I have to tell you it was quite a hardship. For 3 months we struggled to get on top of the bill, kept being late, more fees, etc. After 3 months and ever increasing minimums due (it peaked at over $700) we were struggling just to buy groceries. Our church ended up making a payment for us that got us under the credit limit and back on track (and bought us a month's worth of groceries.) If not for them, I don't know what would have happened.

I promptly applied for a balance transfer with another company and was able to get 0% interest for most of the balance with CitiBank.

We still owe B.A. $1100, now at 6.99% interest, which I am paying off as rapidly as I can. For certain, it WILL be paid off before they raise the interest rates in June. I don't intend to give that bank one dime more than I absolutely have to!

I WILL NEVER, EVER, DO ANY KIND OF BUSINESS WITH BANK OF AMERICA AGAIN!!!!!

[Blipped]

"The customers chosen for this rate hike are ones who both carry a balance and have low APRs—averaging 8.5 percent currently. Their rates will now rise into the low-to-mid teens."

Not true. I have a BoA card with an interest rate of 12.99%. I received a notice from BoA two days ago that to 28.49% the day after my May statement date! My payments have not been late on this or any other account, nor have I exceeded any minimums, this was totally out of the blue. I've just now phoned BoA to reject the changes, then googled to see if this was happening to others as well. Apparently I'm not alone.

[Peg]

I received the notice from Bank of America (BOA) that the fixed 9.9% rate on my credit card account would be increased to a VARIABLE 13.65% rate. I do hold a hefty balance right now on the card due to a recent large purchase, however I have paid down the account to zero many times in the past. I feel like this is a bait and switch scheme from Bank of America. They bought out MBNA and promised to keep the accounts at their fixed rates and then switched it to a variable higher rate later on. This notice especially shocks me, since I refuse any offers that come in my mail that have "variable" rates identified with loan/credit card plans. Variable rates are an outrageous, loan shark tactic by unethical companies that prey on the consumer. I am amazed that anyone would even consider this type of loan, and now it is forced on 4 million or more of BOA customers. Congress is helping the taypayers/mortgagees out of bad loans -- where is congress when credit card companies pull these type of unethical business practices at the expense of the taxpayers too? Not fair and yet no one in congress will help us (4 million taypayers per the reports coming out this week)! I will reject the change to my credit card account terms by BOA and cut up the card, and pay down the account until I can finally close it out in a few months. This is one of the greediest and unethical companies I have ever dealt with. They have lost a customer forever.

[Tom]

I had my rate going up from 9.9 to 14.9%. I will opt out, pay the balance and part ways with Bank of America. This unjustice will come back to harm Bank of America in the future and righly so. I will never do business with Bank of America, nor I will have something positive to say about them, case closed. Oh, I will close the account even if my score is hit.

[Chris]

Bank of America (MBNA) platinum card holder for 20 years with oustanding credit...received notice this week of fixed 9.99% increasing to 15.65% in May, not June. Paying off balance and saying goodbye to future charges on this card and business with BOFA...wachovia/wells fargo gave me 0% for a year on their card...bye bye BOFA thieves, get rich off someone else

[Silverhammer]

I also got hit by this last week, raising my rate from 6.9% fixed to 12.74% variable. I do carry a balance on that card, but only because the rate *was* so low and I could plan my cash flow around it. No more. I will liquidate certain investments, pay the card off within two months, and never use it again. I have two other cards with lower rates, and the Discover Card in particular is much easier to use. Stupid move, BofA.

[FedUp389]

if you can .. reject the increase and continue to pay off your balances at the existing rate.

I got the notice of a proposed increase from 7.9% to 13.5% and promptly "opted out". I have a zero interest balance transfer which starts to incur interest in October.

I will be a former BoA customer by then.

It's time to put them in their place.

No customers = no profits.

From now on it's cash......

[mama train]

I just receive a letter cutting my credit line in half. I have a credit score of over 800 and carry a very low balance. Yes BOA is aware that they are reducing their risk and paying off their blunders on the backs of every American. This is going to get ugly and BOA should be ashamed of their business practices. The economy will eventually turn around but until then….pay down those balances. We need to put this greedy company out of business without jeopardizing American Integrity and going down with the ship. Do not allow the price gougers and scammers to get you. I wont close my account, may never get it back no matter my credit score. I will pay off the account by any means I can find. That’s it, here if I need it, dormant if not. America…pay off your bills, don’t feed the greed.

[anonymous]

I have 2 Bank of America (1 BoA 1 MBNA) credit cards with zero balances and 9.99% fixed APRs. I received the increase notice to 13+% variable rate. I cancelled both, as well as my line of credit, checking, savings, and investment account. Brilliant move BoA! The ratio of debt to deposits they lost was 1:100. I welcome the stock drop. Wells and JP Morgan, nice to meet you.

[Totally Upset]

I also received a letter from BoA. I called and was told by one person that the increase was due to the fact that I was a risky borrower. I then asked her to help me understand exactly what that means, and she transferred me to someone else. That person then told me that I was not a risky borrower but that this is just something thing that BoA is doing to some of their customers. My sister who is in the banking industry explained to me that because my APR is low, and my line of credit is high, they want to deter you from racking up more charges and this is the way to do so. My APR went from 7.24 to 14.99. I was pissed to say the least.

[Really upset]

I too have gotten the interest rate hike. I have been with BofA for 30 years. Not only did 'they' decrease the credit line from 24K to 5K, the interest rate went from 15.9% to 27%. I have a balance, but ALWAYS pay on time and more than the minimum. I took the option out, am paying off the balance and closed all my accounts (checking, savings, 3 cards). There has been no change in my credit score. My husband says I'm taking it personnaly. And he's right! I've moved everything to Chase.

[brotherweb]

OK man. Like I been getting 4.9% on my Bank of America card. That's right 4.9% for years. I've been loving it. So now, that our brother is in the white house and got them banks of trouble, you and me are gonna help them again and again and again. And the really bad part is, these clowns who run those banks are probably republicans.

[Fed Up in Florida]

I received a notice today from BofA. They are increasing my interest rate from 5.9% to 11.74%!! This is an increase of almost 100%!!

I have been a customer since 1998, use the card frequently which gives them processing fees, a 750+ credit score, and a spotless 5 year payment history.

I called to inquire why and I was told it was a "business policy" change and the "economy". What does that mean?! I am a low risk borrower and my credit rating is steady if not increasing.

It doesn't make sense. For years I have received balance transfer offers and just 4 months ago I used one to transfer a balance from another card to this card.

So I qualify for a special balance transfer rate, but now the default APR is being doubled?!

The risk profile just does not make any sense. Based on what I have read here and on many other sites (google Bank of America raises interest rates), there seems to be no reason or consistent logic behind the rate increases.

I am just fed up with Bank of America. I will definitely opt out. Then I will either pay the card of with a balance transfer from another lender (Wachovia and Discover Card are great) or take a 401(k) loan and payoff the card.

And I tell you this... Bank of America will NEVER have my business again!!!

[Former BofA customer]

I just received the notice in the mail stating that my personal 7.9% card would be increased to 13.65%. As I am in the process of paying off debt, this will be moved to the top of the priority list, paid off in a matter of months and closed. I will never do business with BofA again. Also, as a business owner that banks with BofA, my accounts will be closed and transitioned over to Wells. $1,000,000+ of my business' money NOT going through their systems may not impact them much, but if this forum is any indication of the whole reaction to their stupidity....Good Luck BOA.

[Jason P]

I have been a customer with BofA since 1986 when I opened my first savings account.

I have a 795 credit rating, and I had two credit cards, one with a 11k limit, and a master card with a 21k limit. I canceled them both today because they hiked my rate from 8% to 15% after paying them both off with cash. I have not been late for a payment since I was 21 years old and I am 33 now. 23 years means nothing to this bank.

As soon as my direct deposit is transferred to my new bank (yes I opened a new checking and savings account at another bank), I will be closing both my checking and savings account as well.

Well, they can be assured I am not going to "wrack up any more debt" as I am no longer a customer. Excellent job punishing your loyal customers that pay on time. Oh, and keep scooping up broken banks. More of my tax dollars will head your way I am sure...

[Brad]

I have also been caught in this trap. We've never had a late payment and use our $35K line of credit very responsibly. This has nothing to do with US, it has to do with the following steps:

Step 1: Make risky investments with your deposits

Step 2: Watch the value of your investments drop precipitously

Step 3: Hit the Oh-sh*t button.

Step 4: Stop lending money

Step 5: Accept taxpayer TARP funds intended to unfreeze credit markets and increase lending to jump-start the economy

Step 6: Use TARP funds to make more risky investments (aka Countrywide and Merril Lynch)

Step 7: Say that you want to pay back the taxpayer money you borrowed by the end of the year

Step 8: Take advantage of the near zero interest rates to pay low yields on deposits

Step 9: Identify long term customers who pay well but have a "too low" interest rate and actually use their BofA credit card.

Step 10: Arbitrarily raise the interest rates on the identified accounts and tell them that it is because they are "At risk".

Congratulations! You have just completed the BofA 10 step program to borrow money from the American taxpayer, not use the money for it's intended purpose and then pay them back using their own money!

[Victor Wren]

I am another one who did not have excessively low interest rates to begin with, so that part is a complete lie. I have credit scores all in the 700's, but BofA claims that they had to raise my rates because of "activity with other credit accounts." What activity? I have not been late ONCE on ANY card. I am nowhere near the limits on any of my cards. Experian thinks I'm a good risk, but BofA thinks otherwise, so they have raised my rates from 14.99 to 21% variable. Anything they say is a lie. This is nothing but customer abuse, fleecing and usury, engendered by a severely imbalanced power relationship, enabled by a congress that is bought and paid-for by the credit industry.

[Angry Bald Man]

I will be cancelling my B of A account. I gave them a chance to retain my business (have been a customer for many years - excellent credit). Guess they don't need people who actually pay thier bills. How stupid!

[Linda Hollowell]

I, too, will be opting out on the new BofA interest rate. Remember, do not use your card ever again or they will hit you with the new rate. That means you need to change any accounts you automatically have charged to this card, like Netflix or any other payments. They are out to get us, so be smart!