Despite significant increases in credit card interest rates and fees during 2009, Bank of America reported today that credit cards continue to be a significant source of losses for the bank.  During the bank’s fourth quarter, its card services department posted a loss of $1 billion dollars as credit card write-offs remained elevated.  Of the largest six credit card issuers in the country, Bank of America currently has the highest write-off percentage.  Continue Reading »

My wife got an unusual offer from Bank of America in the mail yesterday for a WorldPoints Platinum Plus MasterCard.  Instead of a typical 0% balance transfer offer, this credit card offered a 0% APR or a 2.99% APR on balance transfers, depending on a review of her credit.  The offer, which came with a 4% balance transfer fee, would not be bad if it were for a 0% balance transfer.  Unfortunately, she would not know if her balance transfer interest rate was 0% or 2.99% until after she applied.

Given the 4% balance transfer fee, this was either a decent offer or a relatively poor one.  If she were to get the 2.99% balance transfer rate, she would effectively be charge 6.99% for the balance transfer.  Other companies that offer 0% rates for a year and charge 5% fees are clearly a better deal, as this would save her about $100 on a $5,000 balance transfer. Continue Reading »

All year long, credit card companies have been raising balance transfer fees, cash advance fees, interest rates…just about anything that could go up, has gone up.  Despite all these changes, many credit card companies remain rightly petrified about the new credit card laws which will take full effect in February.  In response to this, Bank of America was the first company to come out and announce that they will be charging annual fees.  However, we’ve yet to hear from anyone who has been charged these fees and would love to hear from anyone whose Bank of America credit card now has an annual fee. Continue Reading »

Ever since the Credit Card Act of 2009 hit the floor of the House of Representatives, credit card companies have been scrambling to rework their business models.  The result:  millions of consumers are paying higher interest rates, credit limits have been slashed, and millions of people are being denied for new credit.  These new “consumer friendly” credit card laws have led to increased fees for credit card transactions ranging from international purchases to balance transfers.  And 0% introductory rates, particularly 0% balance transfer offers, have been reduced dramatically.

Now, thanks to the meddling hand of Uncle Sam, annual fees will soon be added to the lists of new costs levied on American consumers.   According to Forbes, Bank of America will soon be charging annual fees on some credit card accounts. Continue Reading »

According the Wall Street Journal, Bank of America has sent a letter to the Chairman of the House Financial Services Committee vowing to cease rate and fee increases until new credit card laws take effect in February.  This moratorium comes after Bank of America embarked on a nearly year long spree of rate and fee raising.  However, Bank of America has not acted alone.  Nearly every major credit card company has been engaging in these practices which include seemingly arbitrary rate increases, credit limit cuts, and increases on fees for balance transfers, cash advances, and international transactions. Continue Reading »

When a credit card company offers you an interest rate opt out, it is often better to opt out then endure the new rates, especially if you have a large balance.  Consumers with smaller balances that can be paid off may benefit from keeping the card open and paying it full each month as a means to keep their credit score from being damaged.  However, if you have a substantial balance, by all means opt out of rate increases.

During the past year, I’ve heard from hundreds of consumers who weren’t sure what to do.  However, a comment posted today reminded me just how important it is to opt out of rate increases if you carry a balance that you cannot quickly repay.  Here is a horror story posted by Gale:

“I have a Bank of America card. I have payed my payments on time and have never gone over my limit. My apr was 7.9% for years. They just recently they decided to raise my apr to 23.9% it has doubled my payments. Continue Reading »

Effective today, Bank of America has raised balance transfer fees to 4% from a previous level of 3%.  While this move was announced over a month ago, the very fact that one of the country’s biggest issuers of credit cards has taken this step could spell trouble for the future of balance transfer fees.

During the past half decade, credit card companies were engaged in a battle to win new customers.  This was great for consumers, who were offered long term 0% interest rates and often charged little to no balance transfer fees.  As the credit crunch intensified last summer, companies began eliminating no fee balance transfer deals.  By fall, companies began to remove the limit on balance transfer fees.  Prior to the fall, most companies charged a maximum fee of $75 per transaction.  Anyone transferring less than $2,500 paid 3%, while those transferring more simply paid $75.  Continue Reading »

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. Continue Reading »

According to today’s Wall Street Journal, Bank of America will be raising interest rates on EVERY consumer who carries a balance and has an interest rate below 10% on June 1st.  (Source)  This is a truly startling development, and yet another signal that major banks are doing everything they can to increase the profitability of accounts held by responsible consumers with good credit.

Earlier this week, a visitor reported that Chase will also be raising interest rates across the board, although our research has yielded mixed responses on the subject.  (See Is Chase Raising Credit Card Rates on Everyone? for more details) Continue Reading »

According to a recent report from Bloomberg, Bank of America intends to raise balance transfer fees from the industry standard 3% to 4%, a new high for this growing source of fee revenue for banks.  This 30% increase in balance transfer fees, scheduled to take effect on June 1st, marks a continuation of a disturbing trend that has dramatically increased the cost of balance transfers over the past 15 months.

The Rise of Balance Transfer Fees During the Credit Crunch

At this time last year, Bank of America offered no fee balance transfers tied to credit cards with 0% introductory rates that lasted 6 months.  In late 2008, Bank of America increased these fees across nearly every card, to a flat 3% fee with no maximum. Continue Reading »

Because no one really cares about credit cards until something horrible happens, you’ve probably missed out on the growing discussion posted on this blog last year, aptly titled Bank of America Raises Interest Rates.  Beginning this weekend, I started receiving a slew of comments from angry consumers who had low fixed rates ripped from underneath them.  Today, the mainstream media caught up, with an article on Bank of America’s credit card increases appearing in the Wall Street Journal. 

According to the Journal, Bank of America is raising rates on consumers with interest rates of less than 10% or forcing them to close their accounts.  The degree of increases varies, but can be quite substantial.  A visitor of this website, posting as Pissed at BOA, told us that Bank of America raised his rate from a fixed 7.9% rate to an astronomical 23.65%.  When he contacted Bank of America, he was told the reason behind his rate increase was, “not a reflect(ion) of you or your credit history with us or others and it is due to the current economic conditions.”

The latest round of interest rate increases from Bank of America should give everyone with credit card debt, not just Bank of America cardholders, reason for concern.  However, as I’ve told many rate increase victims, having a surprise rate increase can work to your advantage, as long as the proper steps are taken. 

What you should do when your interest rate is increased

1.)  Transfer your balance to a 0% credit card:  Many people with double digit interest rates never even consider balance transfers.  However, 0% balance transfers can work miracles for consumers by saving them hundreds of dollars in yearly interest.  This provides an opportunity to reduce debt substantially without compounding interest expenses.  On the average, a person with a 14% interest rate can save over $100 a year for every $1,000 transferred to a 0% credit card.  For a person with $5,000 in debt, that can translate into over $500 in interest savings during one year.  If you aren’t using balance transfer credit cards to pay down credit card debt, you should be. 

Click here to review balance transfer offers on this site and apply online

2.)  If you can get approved for a 0% balance transfer, keep your old credit card account open:  Closing credit card accounts can have huge, adverse affects on your credit score for a variety of reasons.  First, closing a credit card account without opening a new one reduces your available credit.  This, in turn, increases your credit utilization ratio.  Credit utilization ratio’s account for 30% of your credit score.  Thus, if you had $2,000 in debt and $5,000 in total available credit, your utilization rate would be 40%.  However, if your available credit is cut to $3000, you’re now using close to 70% of your available credit.  This can lower a person’s credit score by dozens of points, thrusting people with good or excellent credit into the average credit category.

A second credit score problem caused by closing accounts is the shortening of your credit history.  If, for example, the credit card you close had been open for years, closing it will reduce your active credit history, another issue that can lower your credit score.

Click here to view free credit score analysis tools

3.)  Pay down as much credit card debt as possible:  While easier said than done, paying down credit card debt is truly the only way to protect yourself against predatory credit card lenders.  While today’s spotlight is on the Bank of America interest rate increases, just about every major credit card issuer has been raising interest rates lately.  Visitors have been posting about sudden rate changes from Chase, Capital One, HSBC, and American Express for months now on this blog (see credit card complaints here).  Call me pessimistic, but I think the worst has yet to come.  As consumers, the best defense is to limit your exposure to the whims of our banks.  And the only way to do that is to lower your credit card debt. 

Final Thoughts

Having your interest rate increased can be a nightmare, but it can also put you on the path to getting out of credit card debt if proper actions are taken.  If Bank of America raised your interest rate, turn your anger into action.  Do a 0% balance transfer and start paying your debt down immediately.  Don’t be a passive victim; be a smart consumer.  And, as our website implies, do a smart balance transfer.

To kick start the process of getting out debt, visit the balance transfer credit card section of this website where you can compare current 0% balance transfer offers and apply online.

If you’ve been the victim of a Bank of America interest rate increase (or any bank’s rate increase), please share your experience by leaving a comment.  Your postings are anonymous and help us keep the public informed.