Questions About BofA Credit Card Rate Increases

We received a great email this morning with some questions about the recent Bank of America credit card rate hikes:

Last week I got the "amendment" letter from the BofA.  My wife & I had this BofA Visa card for about 8 years at 9.99 percent. As far as I can remember, I've never been late with a payment. The letter told us we would now be paying a variable rate, prime plus 11.65 percent. We were actually given a reason: "a change in our business practices..."
 
I would never have even considered a variable rate card while I was getting a blizzard of credit card offers. Variable rate cards were the easiest to sort out first -- if I saw the words "variable rate" I would automatically feed it to the shredder.
 
Of course, reading the yearly agreement notices sent out by my "fixed" rate credit cards, (we have two), I was well aware that in the fine print, the bank reserved the right to change rates at will, just by notifying us. I still don't know how they can legally call them "fixed rate" cards, but put in the agreement that they can CHANGE the interest. Maybe they speak a different English than I do?
 
Three years ago, my wife and I bought a house. When our credit was checked, it was about 760-780 depending on which credit agency was used.
 
I've sent the rejection letter, registered, return-receipt. We plan on keeping the other "fixed" rate card, (they only jacked us up from 7.99 percent to 10.99 percent last fall), which has a near-zero balance on it.
 
My question to you is, in a lot of your creditbloggers posts, the commentors mention that they are going to switch to "good" banks for their credit cards. Can you tell me what banks/cards people consider good???

 

Here's a couple answers for you:

1. Fixed Rate Cards -- Credit cards can change a "fixed rate" credit card to a "variable rate" card anytime they want thanks to some fine print in your credit card agreement. There's currently no protection for consumers against this sort of change. The credit card reforms coming in 2010 will protect everyone against retroactive rate increases, but don't include any specific provisions for fixed rate accounts. 

2. Opting-Out -- Opting out does allow you to reject the rate increase -- but it comes with a lot of strings attached. Be sure to read the fine print and talk about the change with a customer service representative before deciding what to do. Also, we're hearing reports from our readers that when they opted-out of the rate hike, their credit limit was cut. Credit limit cuts -- especially to near your existing balance -- can harm your credit scores.

3. Good Banks -- If you have good credit (scores above 750), there are still some great credit card deals on the market for you. Pulaski Bank offers a no annual-fee account with an 8 percent APR or a card with a $35 annual fee and a 6.50 percent APR. Discover has a great reputation with consumers and offers several credit cards with rates as low as 11 percent. Wells Fargo also seems to be doing pretty well now compared to other big banks. Locally, regional banks or credit unions in your area might also have some credit card deals.

Do you have a good credit card to recommend to our email contributor? Share your suggestions in the comments below.

Emily Peters – Credit.com's personal finance expert and former TransUnion credit bureau insider. Emily writes about credit reports, credit cards, loans and personal finance as the CreditBloggers.com editor.

Comments

[Hedy]

Discover has a great reputation? Not so much! My husband got his Discover fixed rate (10.9%) changed to a variable rate of 15.9%. Discover is just as bad as the rest of them, i.e. BoA, Chase, Citi, CapitalOne. And they only let you opt out with the new rate retroactively applying to the entire outstanding balance! Discover: not good. You'd be better off with a card sponsored by your local credit union.

[Luke Roberts]

I have had bad luck with just about all cards... I found that AMX is consistantly the best. I believe that is because it is a true Debit Card.

They charge the merchant not so much you... I had a problem with 2 MBNA cards that where not mine after a divorce. They still tried to collect from me then sent them to collections.

It saved my butt and my x-wife's who actually owed the debt. We got it removed from our credit report and did not have to pay a dime! Worth a look!

Thanks;
Luke

[Laura]

We received a similar letter and my husband decided to take some decisive action rather than just complain about B of A's unfair business practices. He posted a video on YouTube urging customers to walkout and he redesigned their logo.
http://www.youtube.com/watch?v=u6hy4PBo4tE&feature=channel_page

[John Liming]

When you signed the cardmember agreement, you gave the lender a blank check. How intelligent is that? Banks care nothing for customers--only thebottom line-- the best way to deal with the increases is to pay down and then cancel the cards.

[Mona]

I just received my monthly statement from Chase bank and noticed the minimum payment due went up $220. a month and it is a fixed rate I have had it for about 3 years and it is a life time rate, but the monthly payment was raised from 2% to 5%, the only thing they say we can do is to let them raise our interest rate and that would keep our payment the same. How is this fair??? How are people suppose to live in this economy with things like this going on. What a rip off...

[Debt Rescue]

i think rate of increment is 15.9%