Have a Bank of America Credit Card? Watch Out!
February 7th, 2008 by David Weliver
Even as the prime interest rate tumbles, Business Week reports that Bank of America is jacking up its credit card interest rates. Bank of America recently notified millions of credit card customers that their interest rates would be going up –to as high as 28% – for no apparent reason. If you carry a Bank of America credit card, it might be high time to find a new credit card.
Credit card companies are notorious for finding any excuse to raise customer interest rates – even customers who pay on time, if their overall credit score declines for any reason. But this time, Bank of America doesn’t even have one of those reasons. Apparently they just need the money.
This letter from Bank of America (.pdf) to an anonymous Visa card holder (thankfully not me!) explains how their interest rate is being raised to 28%. Yes, 28%.
How Can Credit Cards Raise Interest Rates Arbitrarily?
Basically, credit card companies can change your interest rate at anytime. If you break any of the terms in your cardmember agreement (are late, go overlimit, or bounce a payment), they will raise your rate without telling you.
Other times they may send you a letter like the one posted from Bank of America, advising you of the change and when it will take affect. They also provide a way to reject the rate increase.
What Can You Do If Your Credit Card Raises Your Interest Rate?
If a credit card company raises your interest rate for a reason that was not disclosed in your original cardmember agreement (you do save those little pamphlets of legalese, right?) you have an option to reject the change to your agreement with them.
Unfortunately, by doing so, you are also telling them to close your account.
To reject a credit card interest rate increase you will need to write to the credit card company at a specific address by a specific date, and abstain from using that credit account again. I would recommend sending the notice via certified or registered mail. And make sure you don’t use the account! Doing so will nullify you rejection letter.
Rejecting a change to your credit card agreement should allow you to repay any balance owed according to your original terms. If you don’t reject the agreement, your rates go up, and you carry a balance, get a new card with a 0% balance transfer APR if you qualify, or start taking some steps to get out of that debt as fast as you can.
Do you have a Bank of America credit card? Has this happened to you with that card or any others? Have you ever rejected a rate increase from a credit card before? I’d love to hear your stories.
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On Feb 7, 2008, SingleGuyMoney said:
I have 2 BOA credit cards and I have not received any information regarding a rate increase. They can jack the rate up to 50% for all I care because I do not use the cards. When I do use them, I pay them off in full when I get my statement.
On Feb 7, 2008, Brainy Smurf said:
That’s too funny… Just yesterday I was mentioning how all of my credit card interest rates had been dropping over the past few weeks *except* my BoA cards…
Looking forward to my letter!
On Mar 25, 2008, DB said:
My rate went from 4 to 19% in one more. When I called to complain, they said they sent notices in the mail, but I probably threw them away.
On Apr 22, 2008, Linda Rosentreader said:
I am a long ways past 20 and I got a notification that my interest would be raising to 28%. I decided that I would pay off the card and take my business elsewhere. BoA is keeping the same repayment terms, just changing the interest. I will close the account when I have paid it off.