According to a BusinessWeek article released today, Bank of America has dramatically raised interest rates on a number of cardholders. In the article, a number of consumers with solid credit histories and a record of consistent payments reported that their interest rates have nearly doubled, with many cardholders being slapped with rates as high as 28%.
Consumers hit with an interest rate hike by Bank of America were offered the opportunity to lock in their current rates if they opted to no longer use their cards. However, finding out if you’re rate will be increased and preventing this from occurring has not been made particularly easy, as Bank of America sent notices without reply envelopes and offer no way to lock in current rates via phone or online.
If you hold a Bank of America credit card with a balance, be sure to call and make sure your interest rate has not been increased. Since Bank of America sent notices through the mail, there’s always a chance you may have tossed the envelope in the garbage with the rest of you junk mail. Better to be safe than sorry in this situation, especially given the massive interest expense a 28% APR would create.
Another way to avoid this issue is to transfer your Bank of America balances to a credit card issued by another company. There are a wide range of credit cards offering 0% interest rates for 1 year on purchases and balance transfers. You can compare balance transfer credit cards in the main section of SmartBalanceTransfers.com.
Also, please feel free to email us or post about your own experiences with Bank of America. Any information you provide can help other readers keep money in their pockets (and out of the banks coffers.)
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February 12th, 2009 at 12:08 pm
bank of america did just this to me. my rated jumped to just over 20%. I receive no bill as I pay on line
yet they claim I was notified, how I’m not sure. I pleaded with them to please lower this to a reasonable rate, after four phone converstations I was directed to a debt mangement co. and my account was closed. I have never made a late payment and my credit scores is good. The worst part is watching the news with ken lewis admitting to a yearly salary of 1.5million, traveling around in his private jet while claiming he had to have billions of tax payers money to help his failing industry. which of course he received but cannot account for what he did with it. now with the billions he recieved from the goverment and by raising interest rates outrageously high we can only hope he is able to again reward himself with at least a million or 2 in bonus money this year. this company should never have recieved a dime of goverment money and Ken Lewis should get on his private jet and have it take him straight to jail, and take all those other idoits that recieved goverment money but cannot account for what happened to it.
February 19th, 2009 at 12:16 pm
Travis,
Have you had any luck with the debt management company? If not, and you have a good credit score, you may want to consider a 0% balance transfer. This will defer your interest expense for a year to help you pay down the balance. Plus, at the end of the year, your interest rate will definitely be lower than 20%.
April 4th, 2009 at 1:57 pm
I just got the letter from bank of america to raise my rates due to “a change in our business practices,and due to the pattern of payments and the annual percentage rates on this account”. I did a balance transfer a few years back with a low FIXED apr until balance was paid off. I’ve been making about double the min payments ever since and never late on one payment. I suppose they were hoping that i would continue to use the card to make purchases because then your payment would go to the lowest apr purchase (balance transfer) and everything else that i would buy would take forever to pay off. But i’ve never used the card once! So I suppose I will have to write them to reject the change and make sure I don’t accidently use that card. I would imagine I will be getting a letter for my other 2 ‘BOA’ cards that I have since they seemed to buy out the other companies that I have. I only have about a year and a half left to be debt free (thank God) so I will just reject anything they try to do and I suppose leave those accounts open with zero balance so they can waste their paper on me. Also I’m pretty sure it’s not the best for your credit score to just start closing all of your accounts. In the mean time for internet purchases and such i will continue to use my Capital One card….so far they’ve been good to me!
April 5th, 2009 at 3:59 pm
I just received a notice from Bank of America stating that my APR will rise from 11.24% (which it was just lowered to recently) to 19.99%!! I called and rejected it, of course, and asked why.. The response I received was infuriating to say the least. I was told that I, along with 4.2 MILLION other Americans were just re-evaluated as high-risks!!! Hmm.. my rate was just lowered recently.. nothing has changed except I actually have more income and have less debt, yet somehow I just became a high risk. Right..
So, Bank of America, you greedy parasites, now that you’ve blown your billions in bailout cash on who knows what, because you can’t seem to account for it, your plan is to dip even further into the pockets of the American people? Haven’t we given you enough?? Disgraceful.
April 7th, 2009 at 10:25 am
Shawn and Angry American (which is a great posting name),
This is a bit disturbing. I first blogged on this issue back in November of 2008. Since then, the number of complaints about Bank of America credit cards has gone down a bit, which led me to believe they had stopped pulling this interest rate hike scheme.
Clearly I was wrong. It looks as if they are re-adjusting “RISK” on their credit card customers at the start of the quarter, which is not a good sign.
For Angry American, you should definitely look into a 0% balance transfer. Get your money away from Bank of America, as they obviously don’t want your business.
For Shawn, don’t get too complacent with Capital One. We’ve had complaints about similar behavior from them. These complaints started coming in a few weeks ago, and a new one came in today.
April 8th, 2009 at 10:06 am
We just got our letter saying our interest rates are going up from BOA. And, we have “Excellent Credit”.
However we are somewhat overextended, and we have found before that the cards advertising 0% for a year, will then tell us that the interest rate for us would be 14%. So not sure what to do.
We will likely send them the “Opt Out” letter and then open a checking account with a Credit Union and see if that helps.
I sent a letter off to your local bank and the main one down in NC, telling them that I realize that they are doing this to try to protect their bank from losses, but as they are alienating many good long term customers, who will leave and not come back, I think that in the long term it will cause them even more losses.
April 8th, 2009 at 9:02 pm
Received a letter today stating that my fixed rate card that has been fixed at 7.9 since opening it in 2005 will be changed to a variable rate which is 23.65%. I called the number in the letter and spoke to a CSR at BofA and asked why the increase and was told “it is not a reflect of you or your credit history with us or others and it is due to the current economic conditions.” This is what the CSR told me and I read directly from the letter that it says to call or write for the reason why and he stated due to “current economic conditions”. My credit is excellent and have no late pays with anyone and this is how they treat me who has been a customer of theirs since 1997 with another credit card. I will more than likely opt out and never use this card again or will use it for .01 and pay in full each month after they waste postage,paper,and ink to send me my statement.
SCREW YOU BOFA
April 9th, 2009 at 7:20 am
Wow. This is the largest increase I have heard of to date. I would strongly recommend transferring your balance to a 0% credit card immediately, but keeping your card open, as closing your credit card can hurt your credit score.
If you have other accounts with them, you might want to switch those to another bank as well. As the big banks become more powerful by virtue of less competition, they seem willing to really stick it to consumers.
I’m sorry to hear about this, but, as I’ve told more than a few people, having a rate lifted by one company can end up saving you money in the long term by providing the impetus to get a 0% rate from a company that doesn’t abuse its customers.
April 10th, 2009 at 1:47 pm
Editor’s Note: Certain language has been edited for a PG audience.
I just got a notice in the mail.
“The standard rate for new and outstanding balances is increasing and will use the variable rate forumula with a margine of 7.74 percentage points.”
“As of Feb 2009, your old variable rate was 4.00 percentage points.”
So they want to raise my % from 4.99% to, what, an additional 3.74%?
They can (EXPLETIVE DELETED) THEMSELVES.
Glad to see this isnt just happening to me. I’m going to be calling them up, canceling my account (which I dont even use anymore, I just make payments on the 3000 I owe) and Ill reject this Expletive Deleted raise.
Expletive Deleted B of A. Nickle and diming Expletive Deleted of Expletive Deleted’s.
April 10th, 2009 at 1:48 pm
“as closing your credit card can hurt your credit score.”
IMO, closing credit cards doesn’t hurt as much as keeping it open. When someone does a credit check on you, they see that you have X many credit cards open with XXX much POTENTIAL debt.
It might sting a bit to close a card, but in the long run it’s best.
April 10th, 2009 at 2:54 pm
Tim,
Sorry to hear you got whacked with a rate increase. I can’t believe how many people are getting these nasty ultimatums. On the positive side, at least they didn’t triple your rate. I’ve heard from people who had rates jacked up to 29%.
I really share your anger and hope you can pay that down quickly to limit the amount of money you have to pay them in interest.
Also, with regard to closing credit card accounts, having a lot of available credit could scare lenders, but when you close accounts, you increase your credit utilization rate, which impacts 30% of your credit score. Basically, if you were using 20% of your available credit and, after closing an account, are now using 80% of your available credit, you will look maxed out and your credit score could really tank. If you’re interested, I just posted about how closing accounts hurt credit scores here.
April 13th, 2009 at 4:44 am
I also went from under 10% to 20+%. I will call to refuse and then pay off most of it and do a balance transfer. Then I will move my account to a Credit Union and have no more dealings with Bank of America.
April 13th, 2009 at 7:54 am
Ann,
Because closing credit card accounts can hurt your credit score, you may want to apply for a balance transfer card quickly before your credit report changes to reflect the closed account. This may help you get a better rate on the new card.
Congrats on fighting back. Credit Unions and smaller banks may be the only banks that will treat you as more than just a credit risk.
August 17th, 2010 at 10:13 am
WHY CAN’T THE GOOD BANK CUSTOMERS WHO ARE BEING SUBJECTED TO THIS UNWARRANTED ABUSE GET TOGETHER AND FILE A CLASS ACTION LAWSUIT AGAINST B OF A . I FOR ONE AM DONE DOING BUSINESS WITH INSTITUTIONS THAT HIDE BEHIND FINE PRINT AND ASK THEIR CUSTOMERS WITH SOLID ACCOUNT HISTORIES TO UNDERWRITE THE LOSSES THE BANK MAY HAVE HAD THROUGH THEIR OWN STUPIDITY