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Bank of America boosting credit card rates

Again. This time the letters have gone out to cardholders who carry a balance on accounts with an interest rate below 10%.

They’ll see their interest rate increased “to the low- to mid-teens” in their June statements, according to spokeswoman Betty Riess.

Bank of America says it has to do this because the cost of providing credit has significantly increased. “In the current environment, the portion of the portfolio that’s under 10% is underpriced relative to current market conditions,” Riess told us.

Really? The Federal Reserve is flooding banks with cheap money and CD rates are pathetic. So it’s hard to imagine that the cost of raising money is the problem.

A rising default rate is the only reason Bank of America’s costs could be going up. And if it that’s the problem, then what does it think will happen when it imposes higher rates on customers who are carrying a balance?

Cause more defaults, perhaps?

Of course Bank of America isn’t the only credit card provider raising rates.

Citigroup. JP Morgan Chase. American Express. They’re all doing it. Even stores like Target are increasing their credit card rates.

But that doesn’t mean you have to accept a rate increase.

Customers can opt out by notifying Bank of America in writing or by phone using the contact information provided in the rate increase notification letter.

You can then pay off your outstanding balance at your existing rate, but the account will be closed and you can’t make any additional charges on the card.

If you make just one purchase, or allow one automated charge from your gym or parking garage, then you’ve accepted the new terms, voiding whatever you may have done to opt out.

Another option is move that debt to another credit card offering a good rate on balance transfers.

Check out, for example, the Pulaski Bank Visa card’s great deal — no balance transfer fee and 0% interest for 6 months.

Comments (6)
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6 Existing Comments
  1. J Peter Gallo said:
    on April 13th at 08:00 pm

    Bank of America lowered my credit line in half. i have a 827 fico, never been late, pay my balance in full every month. never carry a balance. have a 9.9% interest rate which i have never used. it is a visa signature card that was originally with MBNA who was great. Never have liked B of A and hate them more now than ever. What did i do? i canceled my mastercard also with BofA. then i paid off my balance as i always do and will not cancel the card since that hurts a fico. i will never use the card or do anything with Bank of America again. now who wins? surely not bank of america. i guess American Express wins and will get all my business (member since 1965). if i need a visa card then i will use my visa debt card through my local bank. NICE JOB BofA………….you have proved once again that you do not belong in the banking business. OH! when they lowered my credit line they told me a letter was sent out. i am still waiting for that letter and it has been almost a month. imagine, lowering someones credit line and not even having the guts to let them know.

  2. Jimbo said:
    on April 14th at 05:04 pm

    I say let them ding my FICO a little for closing an account. If you don’t use the card they’ll close it for you these days. The banks are constantly looking to unload dormant accounts. They don’t want the risk that you might actually use it and they’d need the capital to back the transaction.

  3. Wendy Norman said:
    on May 9th at 11:28 am

    Bank of America employee tells customer with a high credit score, Our job is not to look out for the customers credit score, we look out for our company. Search the www for other stories of how Bank of America is closing customers accounts who pay on time. These actions automatically lower credit scores. This results in bills being due before paychecks come. I’m going to use my other credit cards. Is this what they’re doing with our stimulus money?

  4. Travel Credit Cards said:
    on November 29th at 09:56 am

    A rising default rate is the only reason Bank of America’s costs could be going up. And if it that’s the problem, then what does it think will happen when it imposes higher rates on customers who are carrying a balance?

  5. Mark said:
    on March 26th at 02:15 pm

    I’ve been reading bad things about BOA for years in everything from web forums to newspapers. They are clearly a disaster on all fronts of their business. I often wonder why anybody continues to do business with them.