bank rates

BofA Adds Penalty Rate To Credit Cards

When the Credit CARD Act of 2009 became law, experts assumed card issuers would recoup revenue lost as a result of the new regulations by adding new fees, decreasing rewards and jacking up interest rates.

Bank of America could charge up to 29.99% APR.Even though rewards programs remain largely intact, consumers are feeling the pinch from new annual fees and higher interest rates.

Now, Bank of America says its cardholders could get penalized if they make a late payment.

Previously, BofA didn’t charge a penalty APR. This meant that even if you were late on credit card payments or had payments returned, BofA wouldn’t charge you any more than its standard interest rate.

Other credit card issuers have employed a penalty APR for years, so if you are delinquent, they might increase your rate on all purchases and cash advances.

This used to be one of the benefits of owning a Bank of America credit card.

Not anymore.

Miss a payment, and you could be socked with a 29.99% APR, although the company has said in interviews one late payment won’t automatically trigger the penalty rate.

According to the Kansas City Star: “The bank will review the account to determine if the new rate is required, taking into account other risk factors.”

The policy change is expected to go into effect June 25. As per the Credit CARD Act, BofA has to give 45 days’ notice before implementing the new rate.

So what does this mean for cardholders?

First, pay careful attention to statement due dates.

Then, always make sure to have enough money in your checking or savings account so that when you make a payment, it is not returned for nonsufficient funds.

Not only will you have to pay a higher APR going forward, you’ll also owe a return fee and late payment fee.

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