Bank of America Takes Rate-Jacking to a New Level
February 8th, 2008 by Ana
Last month during the Great Credit Card Debate I mentioned “rate-jacking” as one of the evil little ways credit card companies seperate you from your money. With all of the Congressional attention one would think they might have laid low for a while … but apparently Bank of America isn’t. In fact, at the same time I was trying to warn people of rate-jacking Bank of America was sending out notice of their latest way to bring in money. BusinessWeek wrote about it yesterday, and before publishing their two-page expose they tried to get some kind of explanation.
I’ve read the article over twice, trying to find Bank of America’s explanation … and it sounds so vague as to be nonexistant. This sounds like a classic case of rate-jacking, where the company is jacking up interest rates solely to bring in more money. And where can they get more money in this new age of credit card defaults and tightening credit? From their most reliable customers, of course!
Folks, if you have a BoA credit card, go rummage through your mail from the last month to double-check that you haven’t been caught by this latest rate-jack. Their opt-out standards are:
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.
Of course if you read this particular blog, that shouldn’t be any problem for you since I am all about paying those leeches off and getting them out of your life forever! But I see absolutely no need to pay them any more money than absolutely necessary, and I am sure you don’t want to indirectly bail out their purchase of the now-infamous subprime mortgage lender Countrywide (who BoA recently purchased).
Rate-jacking is very real, and I expect to hear about it more and more as things get bleaker and bleaker for the credit industry. The absolute best defense against such insidious tactics like rate-jacking is to simply pay those credit cards off and never ever carry a balance again! (Personally I would prefer to hear that you never use them again, but I have become slightly realistic lately.)
Posted in credit cards |
February 8th, 2008 at 9:55 am
Ooooh. I hate B of A almost, almost as much as I hate Citibank! That’s awful!
February 8th, 2008 at 12:11 pm
Thanks Ana for the heads up. I get so upset over their fees and rate increases. I’m glad we left them last year. Good riddance!
February 8th, 2008 at 12:40 pm
That’s why I’m thrilled that credit cards are no longer a part of my life.
February 8th, 2008 at 1:46 pm
That is really terrible… the hikes and the fact that there is nothing actually illegal about this. My employer, a nonprofit, used to have a contract with MBNA, who was purchased by Bank of America. At the end of the year, we decided not to renew the contract and went with Pentagon Federal Credit Union instead… and thank God we did! We’d have some angry members if not.
February 8th, 2008 at 2:39 pm
Folks, help spread the news to current as well as POTENTIAL BofA customers. Of course, personally I say to ditch ALL the credit cards.
February 8th, 2008 at 3:42 pm
Well that makes me glad I didn’t just apply for one with them. I did apply for Amex…sorry Ana but apparently I have no credit report whatsoever and I know that kept me from getting on the apartment lease, so I want to fix that. But no BofA for me. E-mailed this to my dad, since he works there (MBNA legacy) and has a CC from them. I don’t know if he really uses it and if employees will be subject to this. But it’s good to know.
February 8th, 2008 at 10:01 pm
[…] of DebtFREE-Revolution this with her post about Bank of America’s most recent rate-jack. You see, BofA is allowing people to avoid the rate jack as long as they opt-out via the letter […]
February 9th, 2008 at 1:43 am
BofA invented the Credit Card! They invented the tricks and tips.
Don’t forget this though…you are very valuable to them. It cost over $100 to get a new credit worth customer. Do not take bad service in stride. ASk them to take it off for you, if they won’t leave! Others want your business!
February 9th, 2008 at 8:33 am
Unfortunately, not surprising. I got something about the increase (in new balances) a couple of months ago. I’ll see if they try to put it on existing balances or not. If so, I’ve got a nice empty 3% discover card just salivating at the thought of the balance transfer.
BofA logged a 95% drop in profits last quarter, this is ‘probably’ a gut-reaction along with a preventative step to try to get ahead of all the coming credit card defaults (that will come because of the Subprime stuff).
Dinna like it, one lille bit!!
February 9th, 2008 at 9:39 am
RacerX: Actually Diners’ Club was the very first credit card, way back in 1954. But yes I consider them to be pretty low, right down there with Citibank.
Mrs. Micah: Be VERY VERY careful with AmEx…I am sure you’ve read about my experiences with them!
Randall: I am positive this has to do with sevral things. They bought Countrywide Financial (which was rumored to be on the verge of bankrupcty), they took a profit hit, and yes credit card defaults are on the rise according to the news. So they are trying to make their money off their GOOD customers, which doesn’t quite sound like a quality business practice to me. Surf that puppy … but watch Discover because they may end up doing the same thing as the default wave rises.
February 9th, 2008 at 4:53 pm
Ana, Here’s a link to a similar article, I got the hit back in Oct for my wife’s account.
http://www.creditwithdrawal.com/2007/10/16/bank-of-america-raises-the-rates/
Bank of America Raises the Rates
Randall
February 9th, 2008 at 10:25 pm
Randall, looks almost like they were “practicing” on your wife’s account. I wouldn’t be surprised if they lose a lot of business over this, especially if the national media picks the story up even further.
February 10th, 2008 at 5:06 pm
[…] card companies raise your rate. This post came on the back of Debt Free Revolution’s post on Bank of America taking rate jacking to a new level. I’ll will write a post on this next week…so stay […]
February 11th, 2008 at 2:27 pm
I just caught the BusinessWeek article today via MSN. It’s crazy that BofA cares so little of it’s good customers that they do this. A bank that has been growing as much as they have should be doing whatever they can to maintain customer loyalty not make them want to leave. Imagine if Apple treated iPod users like this?!? I have a BofA account from the Fleet days but my days with them may be numbered.
February 17th, 2008 at 2:21 pm
BOA issues CC’s to illegal aliens. Another reason to decide to get them out of your life. How crazy is that?!
March 6th, 2008 at 12:17 pm
BOA issues CC’s to illegal aliens. Another reason to decide to get them out of your life. How crazy is that?!
Umm, they’re a private, for profit, international company, not a government agency. They have no obligation or reason to care about someone’s citizenship beyond their ability to collect money and debts from them.
March 6th, 2008 at 12:21 pm
As for the original post… lol, rate-jacking…
what an insidious and unnecessarily inflammatory dysphemism for raising interest rates.
Never mind that they provided you with advance warning of this “rate-jacking” in the original cardmember agreement that you accepted when you got the card. People are idiots, BofA is perfectly within their right to raise interest rates, and you are perfectly within your right not to borrow money from them in the first place. Use your own damn money.
March 6th, 2008 at 12:40 pm
The Voice of Reason: “Use your own damn money.” Now THAT we can agree on!!! Cut up the credit cards, quit borrowing for everything, save up your money and pay cash!