Credit Card Rate Hikes Coming for Many
March 4, 2008
If you hold a Bank of America credit card you should be watchful of the mail. Recently, Bank of America informed thousands of its cardholders that they would face a rate hike from 9 percent to as high as 28 percent if they did not pay off their balances at the old rate and stop using their cards. Many of these cardholders were current on their payments and in no way close to defaulting on their card loans. In other words, they were good customers.
Bank of America which is the largest credit card issuer since its 2006 acquisition of MBNA states that this action is part of its periodic review of customer credit risk. Not everyone is buying that line.
Consumer advocates are outraged and their argument is simple: Card companies can certainly increase the rates on those who are behind in payments or for those consumers who have had a significant drop in their credit score, but they assert it is not fari to raise rates on those who have paid on time and have no credit problems that would warrant an increase.
Bank of America allows card holders the opportunity to opt out of the higher rate by paying the account off, but such a request must be made in writing.
“The only thing they (the card issuers) can do is raise rates,” says David Robertson of the Nilson Report, who sees rates climbing even for responsible borrowers into the 20 percent range and even higher.