A Credit Card You Want to Toss (BOA)
 

Credit-card issuers have drawn fire for jacking up interest rates on cardholders who aren't behind on payments, but whose credit score has fallen for another reason. Now, some consumers complain, Bank of America (BAC) is hiking rates based on no apparent deterioration in their credit scores at all.

The major credit-card lender in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase, according to copies of five letters obtained by BusinessWeek. Fine print at the end of the letter?headed "Important Amendment to Your Credit Card Agreement"?advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer. "No one could give me an explanation," says Eric Fresch, a Huron (Ohio) engineer who is on time with his Bank of America card payments and knows of no decline in the status of his overall credit.

Bank of America spokeswoman Betty Riess confirms some bank cardholders could be receiving rate increases for reasons other than declines in credit scores, such as running higher balances with their Bank of America cards or with other creditors. She says the increases are part of a "periodic review" that assesses customers' credit risk. She declined to say if the Charlotte (N.C.) bank had changed its credit standards thereby bumping some consumers' rates or how many cardholders were being affected by the review. Bank of America has 40 million U.S. credit-card accounts.

Buzz about the letters is building on the Internet. Since mid-January Credit.com, a credit-card information site, has received 40 complaints from consumers Bank of America had notified of sharp rate increases, even though they were current on their bills, says Emily Davidson, a Credit.com researcher. Complaint sites My3cents.com and BankofAmericaBadforAmerica.org say they have also received similar complaints.

The so-called "opt-out" letters give borrowers the option of no longer using their card and paying off the balance at the old rate. But they must write Bank of America by later this month if they plan to do so?otherwise their rates on existing and new balances automatically rise.

Arbitrary Criteria
What's striking is how arbitrary the Bank of America rate increases appear, credit industry experts say. In recent years, many card companies have turned to a practice called "risk-based pricing," where they will raise a regular paying consumer's rate because of a decline in the person's FICO score. FICO is a credit-risk score developed by Fair Isaac (FIC) that includes a number of risk metrics the Minneapolis company doesn't disclose. Credit reporting bureaus supply creditors with FICO scores along with other data, such as late payments and debts owed.

In a December congressional hearing spearheaded by Sen. Carl Levin (D-Mich.), lawmakers slammed big card companies for using such pricing with customers who pay on time. By law, credit-card lenders can change terms as long as they notify borrowers. Even so, JPMorgan Chase (JPM) and Citigroup (C) announced ahead of Levin's hearing that they would stop the practice of raising card rates based solely on FICO scores.

But Bank of America appears to be taking an even more aggressive stance because, beyond credit scores, it is using internal criteria that aren't available to consumers. That makes the reason for the rate increase even more opaque. "Congress has faulted credit-card companies for lack of transparency in raising rates," says William Ryan, a financial industry analyst at Portales Partners, a New York-based research firm. "Bank of America is bringing it to a new level."

http://www.businessweek.com/bwdaily/...n_id=rss_daily

my credit is near perfect, I just logged into BOA and my interest rate is 27.24%. I don't use their card anymore, havent for a long, and never carried a balance but thats retarded

I have them its very fucked up, paying it off and then going to throw it out.

They gotta make up for the subprime mortgage fuck up somehow....

Well im sure them buying countrywide mortgage a few weeks back didn't help. I read a article the other day that 1/3 of countrywide mortgages are delinquent.

WOWSA!
:Oh crap

I got that letter.. I paid off my BofA Visa a while ago, and only use it if I can't get cash from an ATM, etc.. I immediately pay it off, too.

Banks are becoming hardcore.

The competition has shrunk and they have become arrogant and abusive.

Any company comming up with a better way to do "banking" is going to do some good business.
These "check cashing" places are making a mint from
customers who have had problems with banks.

The banks are struggling because all of their other income areas have been hammered and they are being forced to take multi-billion dollar write offs.

I just saw that citigroup was going to just kick out their citicard customers with good credit.. makes BOA actually look smart.

I agree in that banks are laying off people left and right.

:321GFY Fuck Bank Of America every time i would make a online purchase they would put a security hold on my account until i verify the transaction and the bull shit they would feed me "this is for your own protection" bull shit its to protect your losses. I closed that account 4 months ago.

You got it.
they are also not following the interest rate breaks on home mortgage rates as they fall.
Sorry but best defence is pay off your CC every month or at least transfer the balance to a secured line of credit if possible,
We pay only 3.55% on that compared to my Amex at 14.95

well this happens with all new cards, including amex. its annoying I agree, but most everyday people don't charge tons of money online.:2 cents:

Sounds like our shitty banks and credit card companies :Oh crap

There is so much competition these days that no one should have to pay more than 18% on a credit card. My cards (All Platinum) are only 8.5% and one card is at 9%. Here's how to get it.

First, go to the bank and apply for one of their cards. Avoid the mail offer cards, and definately avoid the co-branded cards. Don't fall for the stupid Award point offers such as airmiles in exchange for a higher rate or yearly payment. Those offers are for suckers.

Get 1 card only, and buy yourself a present. Pay it off quickly, but take a few months to do it. Do not pay it off all in 1 shot. Card companies don't make any money if you do this. Don't make only minimum payments either - it will cost you a fortune. Take your time, but just not too much time.

Next call the card company and ask to have your card limit raised. Right after you do this and get it, apply for another card.

When you get your new card, your rate will be at 18% or 28% or worse. Call this company immediately and request a lower rate. Be polite, but be firm. Let them know that you already have another credit card with X, and that you already have the lower rate even if you don't. Let them know that if you don't get the lower rate, you won't be using their card.

When you get the lower rate (and you will), call up the first credit card and request the same thing. If refused, let them know that you already have this credit limit / low rate with the other company. Act like you don't care if you get it or not.

Some cards offer very low interest (5% or less) loans that you can use to pay off anything. Let them know that you MAY be interested in this. Why? The person you are talking to is a sales person and gets a commission when he can help you. It IS within his power to lower your rates, so they will look for some back scratching. Take advantage of it.

Of course, the best credit card advice anyone can give you is DO NOT GET A CREDIT CARD IF YOU CAN'T CONTROL YOUR DEBT. Cards are necessary for Hotel rooms, rental cards and shopping online, but thats it. If you do your daily shopping with a credit card you're a sucker and will go into debt and they know it. Be smart: Get your cards, but use them in emergencies. Don't get nailed with anything over 9% interest. Pay every bill on time to avoid late fees (and higher interst).

m

Indeed. And I have heard some do'seys about Ozzie..
:disgust

As said above, they are just trying to raise cash by fucking their customers.

On Jan. 22 Bank of America reported a 95% decrease in fourth-quarter earnings due mostly to increases in loan-loss reserves for consumer credit, including rising card charge-offs and write-downs in mortgage-related securities. Bank of America faces another profit sinkhole with its pending acquisition of troubled Countrywide Financial [CFC]. Portales' Ryan notes that boosting rates on existing credit-card holders is one of the quickest levers a bank can pull to try to boost earnings.

I only got 1 single credit card.

Credit industry is corrupt, one could get a better interest rate from the Mafia than most CC cards. Maybe they are synonmous who knows but I only got 1 and that bitch never goes above $500.00 and is currently at $24 bucks or something thats it for the past 10 years...

So true. Legalized loan sharking.

But if they would just look at my spending history its almost the same charges every month and i don't have a history of charging things back so after 3 years i just got fed up. My amex i don't have those issues and i spend 30-40k a month.

Agreed. But that would make too much SENSE.

:2 cents:

fuck all the credit cards....

Damn that really sucks.

From what I can tell my B of A card is still at 9.9%, and I just did a balance transfer that's 0% until September.

Looks like I'll have to keep a close eye on my statements from now on.