As we reported earlier, Bank of America is increasing a number of credit card fees, including balance transfer fees, to 4%. While news of the impending balance transfer fee increase was made public a few weeks ago, I received a letter from Bank of America outlining other, substantial fee increases relating to a wide range of transactions.
First on the list are ATM cash advance fees, check cash advance fees (yet another reason to put balance transfer checks in the shredder), direct deposit cash advances, and wire transfer purchases.
Now, while even I don’t quite know what would trigger a wire transfer purchase, I’ll be careful not to do one. Not only will it incur a 4% fee, but it will also be charged the cash advance rate, which is often in the low to mid twenties, regardless of your regular interest rate.
In addition to the percentage increases for all of these fees, the new minimum fee for any of these transactions has been raised from $5 to $10. While this might not seem like much, it can add up, especially for very small transactions. Here’s a prime example: if a person were to take a $100 cash advance, they would pay $10, plus 4%, or $4. The total $14 fee amounts to 14% of the transaction. And if this transaction isn’t paid in full, you’ll also be charged a hefty 20% plus interest rate.
All in all, cash advances should be avoided at all costs. They weren’t a good deal before, and they are even less so today. So unless you’ll be evicted if you don’t take one, avoid cash advances.
The disturbing issue is the increase in balance transfer fees from 3% to 4%. Bank of America is the first major bank to make this 33% increase. But it is truly only a matter of time before other banks follow suit. After all, isn’t the whole financial mess a product of banks copying other banks in a quest to make a few extra dollars.
By raising balance transfer fees to 4%, Bank of America is setting a precedent. However, it could be worse. They could have stopped offering 0% balance transfer credit cards altogether. Now, that option is probably still on the table at many banks. Already, we’ve seen 0% intro periods decline sharply. Soon, they may disappear altogether and 1.9% or 3.9% balance transfers may become the norm. Hopefully, these higher intro rates will not come with steep balance transfer fees.
Unfortunately, however, bailing out consumers with free money for 12 months isn’t going to bail out the banks. And the banks are more interested in bailing themselves out than their customers.
So, as has become the norm recently, I will end this posting by imploring anyone who stands to benefit from a 0% balance transfer to take action now. Its only a matter of time before you won’t have the option any longer.
June 9th, 2009 at 5:55 pm
I noticed that Bank of America took an amount that was classified as a balance transfer of $1,900 (+) on an October statement and moved the amount over to the “Cash Advance” category and began to charge me ridiculous amount for interest. Is this legal?
June 10th, 2009 at 9:00 am
This is the first I have heard of this type of behavior. I would call them and verify. Get a supervisor and call repeatedly. They may have tricked you into thinking a cash advance check was a balance transfer check, which I suspect could be the tactic here. Please let us know if you have any success.