You know all those notices you get from your credit card company that usually get shredded without much of a glance? You better pay attention to them. I received a wonderful notice that Bank of America was raising my interest rate, from 7.49 percent to 13.24 percent - nearly a 77 percent increase - due to the number of defaults they're dealing with.

Of course if you don't carry a balance then no problem, but unfortunately I do. I have never missed a payment, my credit is outstanding. Bank of America generously offered to lower my rate to 12.94 percent after much discussion. I rejected them and will pay off the balance at the old rate and close the account.

I also typed a nice letter to B of A's CEO informing them I would not be penalized for their malfeasance in loaning money to deadbeats, pushing credit cards on those who aren't credit worthy and convenience checks and balance transfers that force people into paying interest indefinitely on older balances. And just in case any of you have a B of A card and would like to do the same, here is his address:


Kenneth D. Lewis
Chairman, CEO and President
Bank of America Corporate Center
100 North Tryon Street
Charlotte, North Carolina 28255

Check those notices people, you could be in for a big surprise.

I am credit card free Speech, but I appreciate this. I agree that it is not fair for you to have to pick up the pieces.

Hello Steve:

I'm not going to look back, but during the dufus' administration, when the bank lobby wrote the legislation that allowed the banks to arbitrarily change the rules in the middle of the game, I posted about it.

For sure, Elliot thought it was great. I don't remember you being on my side, though.

excon

Hopefully, the new Credit Card holder's bill of rights will be quickly passed, that deals with these practices.

Its not just BOA. I had a similar issue with AMEX. They raised the interest on one of my credit cards, even though I haven't missed a payment for years and it has a fairly high balance.

On the other hand in BOA's defense, I recently paid one payment late because I forgot there was a holiday so I missed the payment by one day. That card had a VERY low promotional rate which was jacked up, but they restored the rate when I called with an explanation.

Yikes! It furthers my devotion to not keeping a balance on my credit card.

Hello Steve:

I'm not gonna look back, but during the dufus' administration, when the bank lobby wrote the legislation that allowed the banks to arbitrarily change the rules in the middle of the game, I posted about it.

For sure, Elliot thought it was great. I don't remember you being on my side, though.

excon

I don't remember it, ex. But if sticking a finger in the eye of solid customers was what you were referring to I think I would have been on your side.

Hopefully, the new Credit Card holder's bill of rights will be quickly passed, that deals with these practices.

Its not just BOA. I had a similar issue with AMEX. They raised the interest on one of my credit cards, even though I haven't missed a payment for years and it has a fairly high balance.

On the other hand in BOA's defense, I recently paid one payment late because I forgot there was a holiday so I missed the payment by one day. That card had a VERY low promotional rate which was jacked up, but they restored the rate when I called with an explanation.

I was a few hours late with making an online payment once (even though it was on the due date) and Citi worked with me that way. BOA would not budge. That's OK, though, I won't be paying their new rate for long (if at all).

Yikes! It furthers my devotion to not keeping a balance on my credit card.

Believe me, NK, I don't want to carry a balance but sometimes you got to do what you got to do - life happens. A small adjustment I could live with, but this is extortion.

Hello again, Steve:

Here it is. It was a response to a question in other law, so you're excused: https://www.askmehelpdesk.com/other-law/how-do-fight-citicard-57175.html

excon

Hello again, Steve:

Here it is. It was a response to a question in other law, so you're excused: https://www.askmehelpdesk.com/other-law/how-do-fight-citicard-57175.html

excon

Thank you.

B of A needs to raise $10 billion based on the stress test results . How did you think they would accomplish that ?

The White House leaked that info one day before the board of directors vote. They voted Ken Lewis back in anyway.

I'm not defending their actions here. But B of A would be in much better shape today if Paulson and Bernanke didn't strong arm the bank to complete the Merrill Lynch acquisition.When Lewis testified under oath that he was forced to go along with the deal he became a marked man (and yes this shameful move happened under Bush's watch ).
Busting Bank of America - WSJ.com (http://online.wsj.com/article/SB124078909572557575.html)


BofA had discovered billions of dollars in undisclosed Merrill losses, and Mr. Lewis was considering invoking his rights under a material adverse condition clause to kill the merger.

Of course Lewis does not get a pass for overpaying for Countrywide which is the real source of B of A's financial issues .
Survive or fail ; B of A did not need the Fed's help or their now endless clutch on their business.

B of A has a history of scrubbing it's business of low interest credit cards.
I would shop around for a new one and transfer the balance... or even better... consider keeping a home equity line of credit and transfer any balances there if you must keep a bal.running . I would not keep a balance on the card . But... do not close the card... just keep it open and unused.

Unfortunately , under normal economic times the banks encourage running balances. But now they need the $$ and do not want to keep customers who run balances. Citigroup, Chase and America Express have all made similar moves.

By the way... credit card rates have been historically a state issue(In a 1978 SCOTUS ruling. The Marquette Bank opinion permitted national banks to export interest rates on consumer loans from the state where credit decisions were made to borrowers nationwide... effectively bypassing state usary laws.
http://www.bankrate.com/brm/news/cc/20020320a.asp
A 1996 SCOTUS decision cleared the way for high late fees .). New Fed rules were adopted at the end of Bush's term.. but they don't go into effect until 2010. Under the new rules, consumers will have to be given 45 days notice of any changes to the terms of an account.

But be careful what you wish for . Caps on rates allowed and other conditions would indeed be protection for the consumer . The cost will be in services denied for those the banks don't consider to be credit worthy.


Bush has let his banker friends write the rules.
What rules were revised in the last 8 years that gave the banks extra ability to do this that they did not have before ?

[QUOTE]B of A has a history of scrubbing it's business of low interest credit cards. I would shop around for a new one and transfer the balance... or even better... consider keeping a home equity line of credit and transfer any balances there if you must keep a bal.running . I would not keep a balance on the card . But... do not close the card... just keep it open and unused.

I immediately applied for and was approved of course, for a no annual fee Visa @ 7.25 percent. And once a business pi$$es me off that bad I'm done. The card will be gone ASAP, I don't need BOA. I may still consider a home equity loan but I'm not sure the benefits would be enough to worry about in my case.


But be careful what you wish for . Caps on rates allowed and other conditions would indeed be protection for the consumer . The cost will be in services denied for those the banks don't consider to be credit worthy.

You know I'm a free market guy, but this is unethical. Penalties for deadbeats I'm fine with and people should know the terms before getting into something. But changing them in the middle of the game to penalize those who've broken no rules is more than I'll stand for.

The only reason I advise holding onto to the card unused is that closing out accounts like that tend to have an adverse effect on your credit rating. I have been holding onto a Discover card unused for several years now for that reason.

the only reason I advise holding onto to the card unused is that closing out accounts like that tend to have an adverse effect on your credit rating. I have been holding onto a Discover card unused for several years now for that reason.Is that an American-only thing? I recently moved all my banking over to another bank that was charging me no fees. I can't stand being charged fees for doing 98% of my banking online. I also cancelled their credit card and got one at the new place. I have no idea what my credit rating is as a score, only that my banker told me that I have a very high rating.

Don't know if it's a US thing or not. I kind of doubt it . You should check your rating independent of bank to be sure .

Don't Close Credit-Card Accounts - Kiplinger.com (http://www.kiplinger.com/columns/ask/archive/2007/q1007.htm)

I think it's 6 of one and a half dozen of the other. It kind of depends on your total available credit on the cards I believe and I'm not too concerned with that aspect. On the other hand, some are closing out unused cards for you anyway. I had an unused Capital One card for years and they closed it out a while back. I'll be fine without BOA.

Don't know if it's a US thing or not. I kind of doubt it . You should check your rating independent of bank to be sure .

Don't Close Credit-Card Accounts - Kiplinger.com (http://www.kiplinger.com/columns/ask/archive/2007/q1007.htm)I don't get the thinking behind stuff they say like:

It's also helpful to keep open old cards because they show a good history of managing credit. I have one card only that I use for large purchases or travel, then pay it down to 0 within a couple of months. I never understood people that carry 10 credit cards though I'm pretty it has something to do with affinity programs.

It is not my game . I just find this common advice given in a number of links .It is the way FICO is calculated . It has something to do with credit availability more than history.

It is the way FICO is calculated . It has something to do with credit availability more than history.Hey I'm learning something today. It looks like we calculate it differently: CBC Marketplace: Credit cards and credit scores (http://www.cbc.ca/consumers/market/files/money/credit/getinfo.html)

it is not my game . I just find this common advice given in a number of links .It is the way FICO is calculated . It has something to do with credit availability more than history.

Actually it's both as I understand it, as they also advise keeping your older cards in particular. Either way, I'm not worried about my credit score. I'm sure if I needed something my 100 plus year old family owned local bank would take care of me.

If you want to commiserate ,I've had a running battle with HSBC over other policies they adopt (overdraft)... and now a battle over an account I closed and they reopened without informing me(an issue that is getting uglier by the day) .

Damn it, that's where I moved everything (HSBC). So far so good but I'll keep an eye on things.

If you want to commiserate ,I've had a running battle with HSBC over other policies they adopt (overdraft) ...and now a battle over an account I closed and they reopened without informing me(an issue that is getting uglier by the day) .

I love HSBC, too but they haven't irritated me enough yet to tell them to kiss off. I have significant line of credit with them (with a zero balance) through a furniture store so I'll hang on to it for a while. My next battle though is going to be with Farmers Insurance and their obsession with raising my rates for no good reason. That's the one thing about Texas, we don't have an income tax but we have some of the highest property insurance rates in the country.

My wife works for a bank that strictly does business credit card. They jacked people's rate to 39% (because of the state their head quarters are I think they can go up to 40%). And now they are wondering why so many people are defaulting.

In my opinion they are worst then the mob.

My wife works for a bank that strictly does business credit card. They jacked people's rate to 39% (because of the state their head quarters are I think they can go up to 40%). And now they are wondering why so many people are defaulting.

In my opinion they are worst then the mob.

That was a point I made with the "Sr. credit analyst" I spoke with who didn't seem to get the connection. If your line of reasoning was you had to raise the rates because of so many defaults, wouldn't that lead to more defaults?

EXACTLY Speech!! Yeah would you think someone would say Hey times are tough and we can probably look like we care about our customers if we helped them a little bit by freezing or lowering their rates. But instead they raise it so high people can't even pay them minimum so then they lose even more money. Just makes no sense.

Just makes no sense.Hello again:

You guys are talking about the symptoms, not the disease. In my view, in recent years, the entire industry shifted their focus away from providing customer service, and toward lobbying congress for laws that AUTOMATICALLY reward them whether they provided service or not.

The ability to arbitrarily raise your interest rate is the best example.

The natural progression of thinking like that, would be to raise rates instead of increasing customer service, and not thinking twice about it. That today, has evolved into an arrogant expectation by the banks, that that's the way it should be.

That is going to have to change. Under the new rules coming under Obama, they will.

excon

The natural progression of thinking like that, would be to raise rates instead of increasing customer service, and not thinking twice about it. That today, has evolved into an arrogant expectation by the banks, that that's the way it should be.

We all want customer service, sometimes you sacrifice some of that for economics. Sometimes like this instance, you get screwed. I'll remedy that myself... but I don't put any hope in Obama's regulations restoring things to the way they should be. I just see more government involvement in every area of my life and don't believe that's going to be a good thing.

I just see more government involvement in every area of my life and don't believe that's going to be a good thing.Hello again, Steve:

Dude! You complain about a problem, and when I tell you that Obama is going to FIX the problem, you complain about that too.

Talk about the party of NO.

excon

Hello again, Steve:

Dude! You complain about a problem, and when I tell you that Obama is going to FIX the problem, you complain about that too.

Talk about the party of NO.

OK, let me begin with NO since I'm of the party of NO. It's not that I would object to this particular fix, it's what else he might "fix" in the process that has me concerned. His plans to expand government exponentially is not a good thing for you or me. I feel confident that once you get over the honeymoon you'll get on board with that, too.

Speech I feel Confident that once this problem is fixed by Obama And nothing else gets "fixed" that doesn't need to get fixed you'll get over the honeymoon of distrust and you'll get on board with us.

That was a point I made with the "Sr. credit analyst" I spoke with who didn't seem to get the connection. If your line of reasoning was you had to raise the rates because of so many defaults, wouldn't that lead to more defaults?

That's not a very good Sr. Credit Analyst. And I speak as a senior credit analyst.

I have been doing defaulted loan workouts for years. The one thing you shouldn't be doing if you want to get paid back is to make it harder for your customers to pay you back. By decreasing the customer's cash flow through an increase in interest, you are making it almost a sure thing that you will be suffering a loss.

The best method to use is as follows:

1) Freeze the line of credit so that the borrower cannot borrow more under your line... limit the possible loss of principal.
2) Meet with the customer and detgermine what he can pay and how often, and work out a payment plan that doesn't completely drive him into bankruptcy.
3)WAIVE the pentalties and fees and higher interest rates as long as he continues to pay according to the new repayment plan.
4) Continue to maintain regular communication with the customer so that you can remain on top of his financial condition and know where you stand.
5) Only if after trying to work with the customer he is still not doing what he should to fix the situation should you then start to take legal action like filing suit in court, raise the interest rates and levey the fees. Because at that point, the customer no longer is willing to work with you, and you have nothing to lose by doing it. Either he's going to disappear (in which case you get nothing anyway) or he's going to file for bankruptcy protection (in which case you are only going to get pennies on the dollar anyway).

BTW excon, I was never against regulating interest rates. I happen to be in favor of regulating credit card rates. I so no reason that credit cards should be able to get away with things that banks are specifically prohibitted from doing. I want the credit card regulations (and the regulations for credit unions) to be the same as the regulations that banks have to observe. I happen to think that the usury laws in the USA, especially foir credit cards, are way too linient. This happens to be one the few areas where we are in agreement.

Elliot

That's not a very good Sr. Credit Analyst. And I speak as a senior credit analyst.

I have been doing defaulted loan workouts for years. The one thing you shouldn't be doing if you want to get paid back is to make it harder for your customers to pay you back. By decreasing the customer's cash flow through an increase in interest, you are making it almost a sure thing that you will be suffering a loss.

The best method to use is as follows:

1) Freeze the line of credit so that the borrower cannot borrow more under your line... limit the possible loss of principal.
2) Meet with the customer and detgermine what he can pay and how often, and work out a payment plan that doesn't completely drive him into bankruptcy.
3)WAIVE the pentalties and fees and higher interest rates as long as he continues to pay according to the new repayment plan.
4) Continue to maintain regular communication with the customer so that you can remain on top of his financial condition and know where you stand.
5) Only if after trying to work with the customer he is still not doing what he should to fix the situation should you then start to take legal action like filing suit in court, raise the interest rates and levey the fees. Because at that point, the customer no longer is willing to work with you, and you have nothing to lose by doing it. Either he's going to disappear (in which case you get nothing anyway) or he's going to file for bankruptcy protection (in which case you are only going to get pennies on the dollar anyway).

BTW excon, I was never against regulating interest rates. I happen to be in favor of regulating credit card rates. I so no reason that credit cards should be able to get away with things that banks are specifically prohibitted from doing. I want the credit card regulations (and the regulations for credit unions) to be the same as the regulations that banks have to observe. I happen to think that the usury laws in the USA, especially foir credit cards, are way too linient. This happens to be one the few areas where we are in agreement.

Elliot

Elliot why do they do this then? I do not know what Speech does for a living but I assume it is not banking. If an IT Geek (Me) and speech can see what needs to be done why don't the people who make the decisions and who are supposed to be the experts realize this? Is it greed? Is it just making their quarterly reports look good?

I have been doing defaulted loan workouts for years. The one thing you shouldn't be doing if you want to get paid back is to make it harder for your customers to pay you back. By decreasing the customer's cash flow through an increase in interest, you are making it almost a sure thing that you will be suffering a loss.

All good points Elliot. That seems a no-brainer to me. The good news here is I'm not defaulted on anything and I don't need BOA. Maybe they think that since I do pay my bills well I can afford the increase. Who knows what those idiots think, in my dealings with BOA they seem to have a split personality and it's somewhat like dealing with car salesmen.

Spit,

Because credit card execs don't take the advice of credit analysts. They see their industry as if it were under the same conditions as early 2007. They think that if they raise rates, they'll lose a few customers, they'll have to deal with a few delinquencies, but they'll see a 60% increase in credit card incomes.

What they are missing is the fact that their delinquencies won't increase just a little bit, but rather by a HUGE amount that will cripple those credit card companies. And they won't lose a few customers, they are going to lose their best customers in droves. The economic pressures are completely different from what they were 2 years ago, but the execs can't see that. Or they may see it, but they can't internalize it. They see the possibilities of profits, but they can't see the trap they are setting for themselves. And credit analysts in some back office earning $60K - $80K a year don't exactly have the ear of the President of B of A who is earning that about every two weeks or so. They don't live in the same worlds, and they don't talk to each other.

Elliot

Spit,

Because credit card execs don't take the advice of credit analysts. They see their industry as if it were under the same conditions as early 2007. They think that if they raise rates, they'll lose a few customers, they'll have to deal with a few delinquencies, but they'll see a 60% increase in credit card incomes.

What they are missing is the fact that their delinquencies won't increase just a little bit, but rather by a HUGE amount that will cripple those credit card companies. And they won't lose a few customers, they are going to lose their best customers in droves. The economic pressures are completely different from what they were 2 years ago, but the execs can't see that. Or they may see it, but they can't internalize it. They see the possibilities of profits, but they can't see the trap they are setting for themselves. And credit analysts in some back office earning $60K - $80K a year don't exactly have the ear of the President of B of A who is earning that about every two weeks or so. They don't live in the same worlds, and they don't talk to each other.

Elliot


That is what I thought is happening but I was hoping it wasn't. I have always had the attitude that you know (or at least should know) what you are getting into with a credit card. But I feel for people more in this climate because some people who always did the right thing are getting screwed for something that is not their fault.

because some people who always did the right thing are getting screwed for something that is not their fault.

Exactly.

The movie Fight Club comes to mind in this mess. Minus the split personalities.

Confirmed, credit card companies are expecting the good customers to subsidize the deadbeats (http://www.nytimes.com/2009/05/19/business/19credit.html?_r=1&ref=business) thanks in part to the new credit card "reform" which will limit penalties on risky borrowers. Sounds vaguely like what happened with the housing industry, we're being penalized to help deadbeats pay their mortgages. I guess that's "social justice" for you.

Yes that should stimulate consumer spending and confidence. Put that right up there with the new mileage standards and this idiotic cap and tax proposal going through Congress as some of the most a$$-backward ideas ever conceived to move the economy out of a downturn.

Still this is what he promised and we should not be surprised that he intendeds to go through with his plans. We were forewarned.

Confirmed, credit card companies are expecting the good customers to subsidize the deadbeats (http://www.nytimes.com/2009/05/19/business/19credit.html?_r=1&ref=business) thanks in part to the new credit card "reform" which will limit penalties on risky borrowers. Sounds vaguely like what happened with the housing industry, we're being penalized to help deadbeats pay their mortgages. I guess that's "social justice" for you.

There's a fairly well known Apple advertisement in which a "Bill Gates" type is counting the amount of money he's going to place in advertising vs, how much he's going to place in upgrades to fix the bugs in Vista. The Apple representative asks him if he really thanks that small an amount is really going to solve the problems with Vista? The Gates clone says that the Apple guy is right and moves the entire amount into advertising.

See it here: YouTube - Apple "Get a Mac" ad: Bean Counter (http://www.youtube.com/watch?v=MimCZikP8cY)

The point is that I see the credit card companies doing the same thing. Instead of fixing the problems by getting rid of the bad credits, thus becoming profitable again, they are instead going to put all their resources into milking the good customers as hard as possible.

See what happens when the government starts messing with stuff they shouldn't? It's the Law of Unintended Consequences.

Elliot

See what happens when the government starts messing with stuff they shouldn't? It's the Law of Unintended Consequences.

I'm not so sure that Obama sees it as unintended. After all, punishing success is a huge part of the liberal agenda. The good customers are apparently not suffering enough.

Speech,

I wasn't going to say that. But I have to say that I don't think any of these consequences are "unintended" on the part of Obama. They are just unintended by the people who voted for him and pushed for government intervention on the issue.

Confirmed, credit card companies are expecting the good customers to subsidize the deadbeats (http://www.nytimes.com/2009/05/19/business/19credit.html?_r=1&ref=business) thanks in part to the new credit card "reform" which will limit penalties on risky borrowers. Sounds vaguely like what happened with the housing industry, we're being penalized to help deadbeats pay their mortgages. I guess that's "social justice" for you.




Banks are expected to look at reviving annual fees, curtailing cash-back and other rewards programs and charging interest immediately on a purchase instead of allowing a grace period of weeks, according to bank officials and trade groups






You know what will happen:

- sterling customers will notice this and start paying cash or check or a debit card and will reduce their credit card use. It will be painful but a needed behavioral change.



- those that are already not cognizant of credit card interest rates will not notice and further be badly affected,


- those that use a credit card only for emergencies will also suffer from these changes.













G&P

I for one will stop using it if I start losing the grace period... which will in turn slow down my spending... across the board consumer spending will further slow down.. not a good receipe for getting the economy moving .

I for one will stop using it if I start losing the grace period ...which will in turn slow down my spending ....across the board consumer spending will further slow down.. not a good receipe for getting the economy moving .

True. The tightening of commercial credit has slowed down the ability of businesses to produce goods and services. If we see a tightening of retail credit, it will slow spending, lowering the demand for the goods and services. The result will be a shrinking economy.

Add to that the increase in inflation that's coming from the government printing more money and the higher cost of fuel, and we're talking about STAGFLATION the likes of which we haven't seen since the Carter Administration.

Obama is batting 1000. He's doing everything EXACTLY WRONG to fix the economy.

-Increased spending
-Increased borrowing
-Bailouts of businesses that should be failing
-Taking control of private businesses and industry
-Increased regulations on industry and private businesses that increase production costs
-Not increasing the use of our home-based fuel resources
-Using necessary food products (corn) to instead produce fuel
-Increased taxation on EVERYTHING
-Tightening of credit markets
-Making sure that inflation increases by printing additional money
-Creating additional government spending via earmarks and pet social projects

A perfect record... Only a messiah can have one of those.