BofA Pledges To Stop Raising Credit Card Interest Rates
The AP reports Bank of America has promised to stop jacking up interest rates on credit cards with fixed interest rates. But that doesn't mean your rate won't jump.
The story says:
Since most Bank of America customers have variable rate cards, however, they could still see their interest rates go up. The interest on variable-rate cards is tied to the rise and fall of the prime rate.
The move is a reaction to lawmakers' efforts to bump up the date credit card reform laws — which limit banks' abilities to raise fees and interest rates and force them to disclose hidden fees — from going into effect on Feb. 1 to Dec. 1. The story says the House of Representatives Financial Services Committee will hold a hearing on the date-changing legislation Thursday.
Bank of America pledges halt on credit card rate hikes [AP via USA Today]
(Photo: e. wilder)
(Thanks, Jeff!)
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Comments:
I think a lot of consumers (myself included), is pretty much pissed off at the banking industry. Yes yes I know if you use they're credit card, you play by their rules, but given to the financial meltdown, a lot of us are tired of this game and will try to immediately pay down their debt.
Frankly, if they like jacking up rates on consumers paying their credit cards on time and using the economy as their reason, then I don't want to play your game anymore. People are finally starting to realize that they can't be apart of this trap.
When I'm credit card debt free, I constantly remind myself of why I should stay credit card debt free.
@Zclyh3: Trust me, its the best feeling ever. Everyone's credit score is going to eat it anyways, so there's no point in playing their game just to get an extra half percent off your mortgage.
"I PLEDGE allegiance to the flag of the United States and to the republic for which it stands: one nation indivisible with liberty and justice for all.".
BoA doesn't seem to be playing by the rules of Justice.
What a bunch of hound doggies!
Yes, now that the entire industry's gone on a fee-hike binge, they're "graciously" pledging not to hike anyone else's rates?
Thanks, but no thanks. How about rolling back some of the draconian fee hikes, and then I might start taking banks' newfound/forced sense of "goodwill" seriously.
"Since most Bank of America customers have variable rate cards, however, they could still see their interest rates go up. The interest on variable-rate cards is tied to the rise and fall of the prime rate."
Just like the Bay of Fundy, Nova Scotia, water levels are tied to the standard tide cycle...
I though every Credit Card came with that statement "rates are subject to change" I gues I was wrong paying your balance in full FTW
I have not been jacked and have a rate of 9.24%. I am glad to know they SAY they won't be increasing it.
"Since most Bank of America customers have variable rate cards, however, they could still see their interest rates go up."
I'm going to assume that "most" customers have variable rate cards for the same reason I do: I had a fixed-rate card and BoA decided it was going to be a variable rate card about 2 months ago.
@HRHKingFridayXX: I never thought of it that way, but you're right. The same people jacking the cc rates are also in control of the mortgages. No reason to take it from both ends...
Lawmakers are still in the good graces of the credit card companies because they gave them so many months to raise rates and fees and lower credit limits, and now they are trying to make it seem like they are pro consumer by moving the credit reform date up by two months when it is already too late.
@Blueskylaw: Thats what I was going to say. Government wants to start enforcing AFTER all the BS has been done. Once again, the government; too late.
@Blueskylaw: I agree. I'm usually pretty pro-government - but we all watched as banks scrambled to change terms, increase interest rates, and slash credit limits while Congress stood around and did nothing. Now suddenly Barney Frank wants to move up the implimentation timeline to December 1st?
Too late, Congressman Frank. The damage has already been done.
@Coelacanth: Well, I can avoid the fees(not that it makes it right), but the rates are harder to avoid. Glad I won't have to worry about it with BOA. I opted out of another rate hike, so I am OK with that too.
You don't have to take this stuff sitting down. I agree what they have done is sleazy, but they have been doing it for years. If you are surprised -shame on you, and if you aren't surprised and they got you- shame on you. I guess I am saying shame on us.
I am glad people are coming to their senses, I just hope it continues. I am hoping the banks went to far this time and the future for them is more PIFers. Shame on them.
@tape: Same here. Mine went from 7.99 fixed to 7.99 variable, but with interest rates having nowhere else to go but up, we're screwed. I pay my balance off in full, but it's still worrisome to know that in emergencies I don't have that great fixed rate anymore.
As consumers look forward to new credit card rules intended to make their lives easier, many are also finding that the cost of using their cards is rising.
Efforts to compensate for the losses expected from the new federal credit card rules are part of what's driving card companies to raise interest rates and fees, some say.
Among the companies raising rates the most:
Capital One, raised purchase and balance transfer rates by an average of 50 percent, cash advance rates by 20 percent and penalty rates by 30 percent.
Citi, which increased its purchase and balance transfer rates by an average of 27 percent. Citi card holders with poor credit have seen their rates increase at least 50 percent.
Discover, which increased its purchase and balance transfer rates by an average of 30 percent.
US Bank has increased its purchase and balance transfer rates by an average of 33 percent.
Discover framed its rate hikes more in terms of business "soundness" than revenue. Rate increases in response to changes in the law "allows us to preserve the safety and soundness of our business while continuing to lend to credit-worthy consumers,"
Capital One said its rate hikes were due to "external challenges" and the economic downturn.
Citi attributed increases to regular reviews of customer accounts.
All BS statement made by companies facing upcoming regulations that will directly impact their executive bonuses.
I never have to worry about cc interest and games b/c I refuse to give them my business. I would rather have to eat ramen noodles for a week, or take the bus if my car breaks than have a card to charge things on in case of emergency.
A pledge from BOA is like a pledge from a crack junkie. We need to just regulate the banking industry properly and be done with it.
Promises to consumers from these banks are a joke. They will just change the policy back in a few months or create a new way to screw people.
I charge absolutely everything I purchase from a new laptop down to the $0.55 banana at my company's cafeteria. Each month I pay in full and have paid $0 CC interest in my life.
This strategy has gotten me 5 free round-trip flights on JetBlue courtesy of their CC. Even if flying isn't your thing, there are so many other rewards/cash back programs that you can take advantage of without having to carry a debt or get hit with interest.
Credit cards aren't an automatic evil.
@tape: ditto. I closed it out when they sent me that letter trying to raise it and to a Variable rate.
@lincolnparadox: Yeah, and as long as you save up for a down payment (easy when you aren't paying down a balance with interest) and pay your other bills on time you'll be fine. The amount of time and money spent on that perfect credit score just aren't worth it.
F*** BofA.
@ElPresidente408: "5 free* round-trip flights"
*Courtesy of jacking up rates to 29.99% on someone who has a balance after being laid off.
Hey, whatever floats your boat.
@HRHKingFridayXX: I have two credit cards that I've paid off every month for the last 3-4 years...and my interest rates are still very high and my credit is considered "insufficient."
I was looking for a better credit card deal at one point and asked for an explanation of why I'm still "insufficient" and all I got was that paying off your credit card every month does little to build meaningful credit.
So I have to be in debt to be approved for more debt?
Yep, screw their system. I'm paying cash when I buy a new (used) car later this year because in the long run I'm better off without that loan anyway.
@HRHKingFridayXX: Oi, what the bank does to someone else's rates is not his fault. He played the game by their rules, and got free stuff out of it. Jolly for him.
Bad form on you for insinuating that he should feel bad about it.
@frank64: BofA was the first to play these shenanigans, and I rightly declined their new conditions as it would have been disasterous. I paid off my balance one of the accounts, and have made good progress in eliminating the other.
However, there've been reports that some credit card companies don't even allow its users to decline the changes. (I forget - was it Chase or AMEX?) Had I the misfortune of having a significant balance with a company like that - while balance transfers are still possible - it could have been industry-wide in theory.
DAMMIT! I used to have a fixed 7.9% card with these clowns! Guess what letter I got in the mail like 3 months ago?
"We're changing your rate from 7.9 fixed to prime + XXXX which is currently 7.9%"
MOTHER F***.
I love how they chose to peg it to the PR right now, at what is essentially the minimum the PR could ever be, so that you know there's no way it will ever get lower than it is now.
Compare this to a card I used to have which I opened when the PR was about 7% and its rate was Prime MINUS 0.01%... When the PR dropped like a rock I suddenly had a 4% credit card.
With my new BofA rate obviously it'll never go below 7.9%.
Oh, but if the prime rate gets hella high you know they'll convert it to fixed at that point, to rob you of getting any benefit out of the rate drop. and probably tout that action as a big favor to the customer.
Ok i'll quit ranting now. but CC companies just make me so freaking mad!
@lmarconi:
Yes, I agree. That's the only way to do it by paying cash. Consumers have finally started to realize why they shouldn't play this game anymore.
Soon, banks are going to be shaking in their boots because consumers keep paying down their debt.
@Zclyh3: I would love to live in a world where cash is king and people start to save for their big purchases. I don't see it happening in th enear future but if a few of us start to do it = baby steps
@wagenejm: Seconded
Also, merchants are the ones who usually pay for those rewards in higher discount rates versus a "non-rewards" card.
So, in other words... once we raise your rate from 9.9% to 29.99%, we promise we are done!