BoA Jacks Up Your Rates To 32.24% If You're Late With Two Payments
Bank of America gave Timothy a fun new "change in terms" yesterday that says if he pays late on his Visa at least twice in 12 months, they're reserving the right to jack his rates up to a higher APR. It could go high as up as an effective APR of 32.24%. Hey, gotta make up for that 32% earnings drop somehow.
This post is a non-event. These types of punitive actions are completely typical and are enforced all the time. They're also completely insane.
Why should the rate jack be so high? Does it really cost them that much if your payment is a little bit late? Nope. These fees started out as ways to recoup costs, then became ways to try to encourage better customer behavior, and now they've metastasized into revenue streams. The credit card industry needs a strong dose of chemo. Full text of the notice below.
A provision for Default Pricing is being added to your account as described...In the future, if you have had two instances of not paying on time in a rolling twelve month period, your account may be default re-priced to a higher rate without further notice. In the event your account becomes default re-priced, any APRs increased as a result of the re-pricing will be reduced a minimum of two percentage points after six consecutive months of on time payments...Default Rates are variable rates calculated using the Variable Default Rate formula with a margin of up to 23.99 percentage points; as of July 31, 2007, the results in a corresponding ANNUAL PERCENTAGE RATE of 32.24%If you don't like it, you can reject the changes following the Rejection Instructions (yes, they capitalize that):
1. Write to us at FIA Card Services, N.A., P.O. Box 17151, Wilmington DE 19850. Clearly print or type your name and full credit card account number and state that you reject this change. You must give notice in writing; it is not sufficient to telephone us.Timothy says the letter didn't say anything about rejecting the charge resulting in your account be closed.2. We must receive your letter by January 18, 2008 or your rejection will not be effective.
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Indeed, it's quite ridiculous. Personal responsibility above all else, but if that layer fails, I personally think the credit card companies are better off mildly raising rates and working out a deal/arrangement with the cardholder instead of ratejacking and hoping that the customer will get even deeper in debt.
At least that way, more of the defaulting people might consider repaying their debts instead of giving up and filing for BK after seeing that it becomes simply impossible to pay anything off, especially if they racked up a high enough debt to begin with.
Slow news day?
the funny thing is that i used to have a capital one card that was a low balance and i always ignored it... jumped to 19.99 percent after missing a payment, got pissed and did not pay for 3 months since it was supposed to be 0 percent for 1 yr... it was easy to settle it then to make arrangements after i did not pay it for a while.
One could say that it is silly. Sure punish you if you are late, but don't late fees do that already? It is like when you are a kid, instead of having one parent punish you, it would be more like getting punished by both each separately.
You can say they are at least nice though, most will jack up your APR with just one missed payment, in some cases do so when you miss a payment on another card, whether it is with their bank or not.
I thought the CEO was on the web the other day saying how they were going to clean up their act?
Sounds more like they are going to clean out your account.
Let's not forget the joys of kicking a man when he's down with the magic of Universal Default.
No sympathy here. Going through life with credit card balances is not wise money management anyway. Then you know that the bill is going to come once a month, and you have a grace period in which to actually make sure the payment arrives. These are the terms you agree to when you sign up for the card. Deal with it. Although BOA has to be the sleasiest.
mestatisized?
So how about 2 instances of sending your payment in plenty of time and them not posting it until after your due date. Or even paying it online (and having a confirmation page) and them not applying it until after the due date. I've had both things happen in the past and had the late charges reversed in both cases, but that would bump up the rate to the default if they chose to abide by this change in rules.
@spevman:
I understand its meaning. I just think if you're going to use big words like "metastasized" in a publication you ought to learn how to spell them first.
If one ever gets royally screwed by a bank (and it has to be deliberate, illegal, or based on prejudicial reasons, NOT because you simply don't like terms no matter the rate duly and legally being disclosed to you), Rep Barney Frank (D)Mass, heads the House Services Committee for Finance and probably would like to hear about it.
I'm not a supported of most of our liberal reps here in Mass (where I live) but darn I like his gumption in trying to corral these businesses.
I understand the pain that carrying revolving debt causes, I was there. But once you get it paid off, you can file BoA's cute little change of terms in the trash because the rates simply do not affect you.
Their timing was awfully close to the hearings on the practices of credit card companies. I guess the check to buy some influence cleared and they feel confident they can do whatever they like.
How does that not run afoul of usery laws?
"the letter didn't say anything about rejecting the charge resulting in your account be closed"
Guess I'll find out, because I rejected the terms when they gave me the option last spring, and again when I received this last month.
i jumped ship from BoA to USAA the second they pulled that crap with me.
they are the epitome of profits for the shareholders.
How about changing the due date and not telling you so that your automatic third party payments are now a week late and then jacking up your rate for late payments?
Just the latest sneaky trick I've been the victim of.
myeasypayment.com allows you to make a BofA payment up until midnight [including non business days] and it will post on that day.
I do not see a problem with the dramatic increase. If you do not pay your bills you deserve harsh treatment. That way those of us that pay our bills on time ALL THE TIME can still get our 5.99% fixed cards. Whats so hard about paying on time anyways? I haven't been late on a payment in 5 yrs.
I simply voted with my money. I closed all my BoA bank and credit card accounts. They don't deserve me!
SCHIFF: It's nice that you have a fairly perfect life, that runs basically according to plan.
Many people, despite very reasonable efforts to make ends meet, can find themselves in trouble. As an obvious example, look at the fate of the blue-collar worker in Southern California right now.
Many of them have been pushed out of their homes, due to fire risk, and then to add insult to injury, many employers are closed right now. No big deal if you're a salaried worker, but a potential tragedy if you're an hourly worker who is living near hand-to-mouth to begin with.
I don't think anybody is arguing that there should be no penalty for late payments, it just seems that this particular penalty is disproportionate to the crime, especially since late could mean 1 day late, but paid in full.
Buy yourself a heart. You need one.
REWINDITBACK: I'm with you on USAA.
I use them for CC, Checking, Brokerage, Auto, Life and Home insurance. In 15+ years of being a customer, I can only think of one time where something they did annoyed me.
I just wish they offered business accounts, so I could run my businesses through them, as well.
@schiff: And people paying 6% interest pay for the cash back rewards for the ones who pay off the balance each month and pay no interest at all!
Who offers a 5.99% fixed interest credit card? I have a great credit rating and I'd like to get one of those. I charge $800,000 a year on my cards for business and we never miss a payment.
Pay your bills on-time and be responsible and you don't have to pay high rates. They charge you 33% because it's apparent that you are irresponsible.
As to the last question, when you contest the change in terms, the account is closed to new transactions, and you are permitted to pay off the current balance per the OLD terms and conditions.
We had a rate increase to our supposedly "fixed" Yahoo Visa card many years ago (from 9.99% fixed to variable, somewhere at 15% or so). So we contested it, and were able to pay it off at the 9.99% fixed until it was paid off, then the account was closed.
LOVE THIS! Somebody asked about usery laws. Then I rememberd this gem. If you've got about an hour to watch brilliant TV online, then take a look at this:
That's "The Secret History Of Credit Cards" courtesy of the PBS television show "Frontline."
This will explain everything you need to know about credit cards. And I think the usery question is explained within the first five minutes, when they explain why the credit card companies all work out of South Dakota.
Did I saw brilliant? Please take a look. I think they said Lowell Bergman is doing the story. He's the guy featured int he film "The Insider." The one that broke the tobacco story for 60 Minutes.
This happen to me on a Bank of America card.
Later I explained I was having financial difficulties and they reduced it to 5% if I agree to keep paying on time for 6 months with out being late.
Just call them if this happens.
There have been around three If You Don't Want Us Screwing You Send A Letter To This Different Address And We Won't from BofA to former MBNA customers (who they bought last year). This makes four. Really sleazy. Esp b/c they make it as user-hostile as possible for existing customers to refuse their userous changes.
My (former) MBNA card is an affiliate to my alma mater, which is keeping me a bit on the "keep" side, but this is getting ridiculous. BofA's inherent evilnosity is overwhelming my alumni sentimentality.
I received the letter from BofA/FIA Card Services also and decided to cancel the card. I'm not at risk for being at default, but I was signficantly bothered by their horrendeously uncooperative "opt-out" mechanism.
Add that to all the crappy service and I just decided to cancel my card after 10 years of service with BoA.
Perhaps this unlucky consumer can call them and try to work something out.
I have the Universal Card and was late by a few days on a payment and my APR went up to 24%. Luckily I caught it and called customer service. They agreed to lower the rate back to the original APR.
Oh, it gets better. I found out this past weekend what the "right of offset" means. Apparently, this little known banking term means, Bank of America has the right to empty ANY accounts with your name on them to offset a credit card bill. I lost my business several months ago and I'm now just getting back on my feet. I'm in credit counseling and while they are prevented from touching me because of any personal credit cards, that didn't stop them from offsetting my business credit card with my personal account. Now, my business has been defunct since February of 2007 and we closed down. I still have my business account with BofA but they didn't touch the $100 I left in it. Rather they took approximately $2300 from my personal accounts leaving me unable to even pay my child support nor any of the bills I had set up to come out of my account. They didn't inform me prior to the offset nor did they contact me after the offset. They pulled this crap on a Friday night so I can't even get help from the bank until Monday. So a word of warning. Keep your credit cards & banking separate. Keep your business accounts in a different bank. Apparently, consolidating your accounts can come back and bite you. Bank of America has just lost a 15 year customer. I'm not pissed they took them money. I understand their situation. I'm pissed that no one had the courtesy to call or write me and that they took money from my personal accounts to offset a business debt from an INCORPORATED business.
bank of fees... simple