Reader Reports Dramatic Bank of America APR Rise

We received a shocking email from a reader called Del earlier this week. He wrote in to report on a crazy situation that occurred after his credit card switched from MBNA to Bank of America ownership:

After Bank of America bought out MBNA bank my credit card changed over and they increased my interest rate from 7% to 25%. I have never been late with my payments to anyone and have an excellent credit report. When I opened my latest statement, I was shocked to see the doubling of my interest rate! When I contacted BofA, I was told that a letter was sent to me asking if I wanted an increase in my rates and that by not responding with a no, they went ahead and increased them [to 25%!]. I never received such a letter. Not only is this unethical, is it legal?

In my youth this was loansharking. I bring this to your attention for two reasons. First, all I ask is that this practice is brought to your attention so you can help others I am sure are being squeezed like this by them, and second to see if you have suggestions for how I could get a fair rate back. On second thought,  I plan to pay off all of my BofA account and never do business with them. What do you think?

What a horrible situation! Technically, it is legal for Bank of America to increase your interest rates as long as they alert you to the change somehow. This business with the letter asking you if you want to raise your rates seems completely absurd to me, but likely covers the legal bases.

If calling and demanding that your interest rate is lowered doesn't work, you should then start paying off the card as fast as possible. You may even want to transfer the balance to a different card with a lower rate. When the account is paid off, do not close it with the bank. Instead, leave the card open but don't use it. Closing credit cards can cause significant damage to your credit scores, so it often hurts you more than the creditor.  Keep the dormant card in a safe drawer at home for emergencies and check in on it once in a while to make sure it is okay. Letting the card go dormant is better for your credit scores and still "punishes" the bank for their bad behavior.

Have you received a letter like this from Bank of America? Have your credit card rates increased dramatically? Share your story in the comments section.

Comments

[Kevin]

I received the "letter" this week advising that effective Jan 19, 2008 my APR would increase from 7.90% to 24.99% if I didn't reject the increase. I have sent in my letter rejecting the increase and I also filed a complaint with the FTC and BBB as this appears to me to be a legal form of extortion.

[Tres]

The exact same thing happened to me. I have been a bofa customer for over 2 years now. I had a rate of 9.9% after my introductory rate. I have been using the card for a remodel of my home and intended to pay it off once I get the appraisal and refinance the home. I currently have a 10,000 balance on the card. My payments went from $200ish to $457 this month. My intererst rate is 23.9% now. Same story as all of the above. I never made a late payment and never went over my limit. I too felt this couldn't possibly be legal. I'd love to hear from someone who knows if there is anything I can do to lessen the damages caused by this. This is causing me a great deal of financial stress. I was also told that a letter had been sent and that I had the option to opt out of the increase. What kind of nonsense is that. Who would "Opt in" to that?
Please if anyone has any ideas...let me know.

[David]

I guess I too can add myself to the list of people being duped by BoA.

While jacking up my rates, they continues to send me teaser promotions. When they sent me a "wipe your credit clean" consolidation offer, I called to see what they would do for me.

Of course this was treated as a loan application which apparently allows them to review all of my accounts with them.

Based on my call to them, they rejected the "wipe clean" offer, proceeded to lower my account limits on two credit cards, and close a line of credit that I wasn't using. I'm sure this is goning to kill my credit score.

Keep in mind: I called them!

Whatever you do, don't call them!

Like many others on this post I always paid on time and have (had) an excellent credit score.

I too am doing everything to get out of BoA, including banking.

Do what I am doing, take your good debt to http://www.Prosper.com and borrow from real people.

I too suspect there is an anti-trust class action suit in here somewhere.

[David]

I guess I too can add myself to the list of people being duped by BoA.

While jacking up my rates, they continues to send me teaser promotions. When they sent me a "wipe your credit clean" consolidation offer, I called to see what they would do for me.

Of course this was treated as a loan application which apparently allows them to review all of my accounts with them.

Based on my call to them, they rejected the "wipe clean" offer, proceeded to lower my account limits on two credit cards, and close a line of credit that I wasn't using. I'm sure this is goning to kill my credit score.

Keep in mind: I called them!

Whatever you do, don't call them!

Like many others on this post I always paid on time and have (had) an excellent credit score.

I too am doing everything to get out of BoA, including banking.

Do what I am doing, take your good debt to http://www.Prosper.com and borrow from real people.

I too suspect there is an anti-trust class action suit in here somewhere.

[Rachel]

This is ridiculous. I never got a letter and I know for sure because I went "paperless" last year so every news about account change comes as an attachment that is called "Important information about your account".

I recently moved abroad and had to use my credit card more than usually for my first month and racked up a decent (though by no means absurd) amount of money. Not only was I charged a 3% foreign transaction fee for every time I used the card abroad (something that MBNA never did), that month my card's interest rate jumped to 28.11%. I have been an excellent customer never letting my ENTIRE balance go unpaid for more than three months, plus I've always paid more than the minimum payment each time--never ever late. Give me a break! I'm transferring and never using this card again.

[Rachel]

This is ridiculous. I never got a letter and I know for sure because I went "paperless" last year so every news about account change comes as an attachment that is called "Important information about your account".

I recently moved abroad and had to use my credit card more than usually for my first month and racked up a decent (though by no means absurd) amount of money. Not only was I charged a 3% foreign transaction fee for every time I used the card abroad (something that MBNA never did), that month my card's interest rate jumped to 28.11%. I have been an excellent customer never letting my ENTIRE balance go unpaid for more than three months, plus I've always paid more than the minimum payment each time--never ever late. Give me a break! I'm transferring and never using this card again.

[VapoRub]

This is all well and good, but I have a complaint about something much more important: the first CINEMATIC TITANIC DVD.

As much as I love the old MST3K days, this TITANIC project simply costs too much. A burned DVD in a sleeve for $15? Come on. I would consider paying $10-$12 for a pressed DVD in a substantial case with extras. I buy every PIXAR movie for about that much. I won't be buying this project at this price.

I predict piracy will damage sales to the point at which Joel and company will throw in the towel early. There won't even be 12 episodes of CINEMATIC TITANIC completed. A lower price would have been so much more realistic. If they sold 10,000 copies at $8, each writer/performer might clear a couple thousand an episode. That's not great show-biz money, but aside from Joel it's probably more than the other people involved have been making lately.

[Tsteelmaker]

Same thing happened to me with Bank of America. 9.9 to 24.9, but am sending a letter rejecting it. Screw all the credit card companies. Beware of Chase/JP Morgan, they will take your intro rate of 5% or so and put it to 29.99% then claim you sent one payment in late.

[saluki]

this just happened to me. i had a MBNA card that was purchased by BofA and today received an amendment letter stating my rate would increase from 14% to 27.99%!! Doubling. I haven't been late on this card in over 5 years and the customer service rep said it was due to a high balance. How the hell can they do this? I can choose to reject, but then lose the use of the card and a 10 year history with them. I am going to transfer the balance to god knows where I guess. One thing he said was that I was not alone and that over 1.5 million customers were sent these letters today.

[Matt]

Same thing here Just had the same letter up from 14% to 27.99%, over 6 years of no late payments and because my balance went up they are screwing me!!!

[Mary Lee Ferrin]

Me too. I just received the letter wanting to jack me from 11.99% to 19.99% - My minimu payment is $143 a month and I pay $702 every month! Way over my minimum. I have never been late. My balance is a little high, but not that high. Barely over 1/2, which I guess is why they "only" want to riase mine to 19.99 instead of 25, like others.

I too am writing to reject the terms and if anyone starts a class action suit, I would be happy to add my name to the list. They also told me not to use my card after February 29th, if I reject the terms or they will automatically go into effect. This thing is getting paid off and then they can pay to send me a paper statement each month on a $0 balance!

[HK]

Same here. 9.9 to 23.99%. Getting screwed like everyone else. I'm onboard with signing a class action lawsuit.

[Mark Boswell]

Wow, I'm not alone. I thought I was a good, responsible customer of BoA who made their payment on time. I guess that's just not enough for BoA. Same as everyone else, I recieved one of these letters today, saying that my 9.99% APR was going to be changed to 23.99% (if you're reading this you probably have the letter). This is highway robbery. Either you close your account (and still pay off the balance at 9.99%, boa wins) or you transfer the account (BoA still get the balance and makes money of past interest) or you pay the outrageous APR and conintue to get screwed. I wonder if this has something to do with the laws trying to be passed stating that banks can no longer raise interest rates for missed payments, and too many people filing bankruptcy due to credit card debt. Sounds like this is BoA's last effort to suck money out of their customers. Sad, really. Wish I had known!

[Lisa]

I had two credit cards with MBNA. One in
my name and one in my husbands. Two
separate accounts. 9.9% fixed. Bank of America buys the account and for a few months everything is fine. Then wham I got a letter last week stating that they are going to triple our rates. My card has a high balance my husband has a low balance. I have never been late or over limit and always make large payments on the cards. Our credit report is clean. I called BofA and was told my rep I could barely understand that it would not affect my purchase rate. Wrong I told her, I read the paragraph to her that says it applies to all categories. After reading all of these comments I am wondering if she was trying to mislead me. I asked to be transfered to a account manager and yes it does apply to all categories and was told it could be 1 of 100 reasons why they raised our rates. Just give me one guy but all he could do was speculate. One reason was high balance, really then why did you raise my husbands rate? 2. Maybe Credit score- Ours is good.3 Overall debt-just paid off two car loans and a credit card. He finally stopped trying to give me a bogus reason and told me I could reject the increase, but it has to be in writing. So I did, I will rip up the cards but not close the account because that can lower our credit score. I can't believe that BofA can legally do this. They deserve whatever headache Countrywide Financial gives them and being a former employee of Countrywide they are in for a number.

[Phil]

Got it today also, 12% to variable 24% there must be something we can do??

[Jenna]

I just got the same letter yesterday. I was offered a balance transfer on a card that had no balance and I called to do the transfer and the rep encouraged me to use all of my available credit and even increased my credit to take advantage of the balance transfer rate. I did and the rate period just expired. I still have a balance on the card and was sent a letter stating my rate would increase to 24.99 based on the fact that my balance was high when I did the transfers??? The transfer that I was encouraged to do, I am now being penalized for! I plan to reject the amendment and pay off this card ASAP and will never use this credit card again.

[Brandon]

I have had a BofA card for over 5 years now. Never a late payment or overlimit. Today I received a letter stating that my fixed rate of 7.90% was being raised to 15.99% as of 3/01/08. The letter gave no reason. The letter stated that to reject this increase I could write to an enclosed address and pay off my balance at the current rate; but could not use the card any longer without the rate increase. I decided to call BofA and found out there is a special dept. set up for this mass letter as they stated. When I asked the woman in this dept. why my rate was being increased; she said she had no idea why. I asked if everyone got this letter with increases and she said a lot of people did. I explained all of the above to her and she said it was just the economy. This is such a scam; but what can you do. I noticed from previous post that it appears to happen when BofA is trying to raise capital for new acquisitions. i.e. MBNA, as stated in many post above and now my letter with the recent news of them investing in Countrywide. Has anyone else noticed this?
1-800-718-6257 - This is the number I was given for questions about this letter. It is called the Retention Dept..

[BP]

I had an MBNA account which was fixed at 5.9% for the life of the account for purchases and transfers. When BofA took over they informed me that the agreement which I had with MBNA was now considered a promotional rate and raised it to 11.99%. Unfortunately I had just dumped $20,000 of home building expenses onto it. At the same time I also had a BofA account with a 7.9% rate but only an $8,000 credit line (it remained unchanged). I borrowed money from my 401K to pay off the %20,000. I then transferred the amount on the original BofA card to another account last month. I also received the letter today informing me the new rate is going from 7.9% to 15.99%. I am leaving the account open but locking up the card. Even, if in the future, they offer me a lower rate,I am sure they will break the original agreement and double the rate once a large balance goes on it. Like everyone else I have never been late on a payment and paying well above minimum. From what I am hearing here, I'm lucky not to be paying 25% on $20,000. I am sending this to my congress person along with the link to this blog. Consumers are being hit hard to pay for the banks poor decision making. My response is to cash in whatever assets I can get my hands on to payoff remaining credit card debt and cut back on all unnecessary spending. If a lot of people are thinking like I am then we are already in recession.

[Christopher]

I for one was also shafted by this ridiculous move by BoA. I Had a BoA AMEX go from 7.5% to 19% & a BoA Visa go from 10% to 21.99%, this is a utterly ignorant move on BoA's part. I for one have defended BoA when comrades & co-workers have bashed it for its less than stellar past practices, but I guess I will now become a BoA hater.

[Jose]

Just got the letter yesterday, going up to 21.99%. I have a high balance, but always make my payments on time. This is such BS, I really wish there was something we all could do - class action?