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OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!

 
THE WTF GUY !!
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02/08/2008 08:33 AM
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OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
BEWARE !! You should check your credit card bank !!
[link to www.businessweek.com]


Top News February 7, 2008, 12:01AM EST text size: TT
A Credit Card You Want to Toss
BusinessWeek



Bank of America abruptly notified cardholders in good standing their rates would skyrocket if they didn't opt out fast. Is BofA greedy or needy?
by Robert Berner

Credit-card issuers have drawn fire for jacking up interest rates on cardholders who aren't behind on payments, but whose credit score has fallen for another reason. Now, some consumers complain, Bank of America (BAC) is hiking rates based on no apparent deterioration in their credit scores at all.

The major credit-card lender in mid-January sent letters notifying some responsible cardholders that it would more than double their rates to as high as 28%, without giving an explanation for the increase, according to copies of five letters obtained by BusinessWeek. Fine print at the end of the letter—headed "Important Amendment to Your Credit Card Agreement"—advised calling an 800-number for the reason, but consumers who called say they were unable to get a clear answer. "No one could give me an explanation," says Eric Fresch, a Huron (Ohio) engineer who is on time with his Bank of America card payments and knows of no decline in the status of his overall credit.

Bank of America spokeswoman Betty Riess confirms some bank cardholders could be receiving rate increases for reasons other than declines in credit scores, such as running higher balances with their Bank of America cards or with other creditors. She says the increases are part of a "periodic review" that assesses customers' credit risk. She declined to say if the Charlotte (N.C.) bank had changed its credit standards thereby bumping some consumers' rates or how many cardholders were being affected by the review. Bank of America has 40 million U.S. credit-card accounts.

Buzz about the letters is building on the Internet. Since mid-January Credit.com, a credit-card information site, has received 40 complaints from consumers Bank of America had notified of sharp rate increases, even though they were current on their bills, says Emily Davidson, a Credit.com researcher. Complaint sites My3cents.com and BankofAmericaBadforAmerica.org say they have also received similar complaints.

The so-called "opt-out" letters give borrowers the option of no longer using their card and paying off the balance at the old rate. But they must write Bank of America by later this month if they plan to do so—otherwise their rates on existing and new balances automatically rise.

Arbitrary Criteria
What's striking is how arbitrary the Bank of America rate increases appear, credit industry experts say. In recent years, many card companies have turned to a practice called "risk-based pricing," where they will raise a regular paying consumer's rate because of a decline in the person's FICO score. FICO is a credit-risk score developed by Fair Isaac (FIC) that includes a number of risk metrics the Minneapolis company doesn't disclose. Credit reporting bureaus supply creditors with FICO scores along with other data, such as late payments and debts owed.

In a December congressional hearing spearheaded by Sen. Carl Levin (D-Mich.), lawmakers slammed big card companies for using such pricing with customers who pay on time. By law, credit-card lenders can change terms as long as they notify borrowers. Even so, JPMorgan Chase (JPM) and Citigroup (C) announced ahead of Levin's hearing that they would stop the practice of raising card rates based solely on FICO scores.

But Bank of America appears to be taking an even more aggressive stance because, beyond credit scores, it is using internal criteria that aren't available to consumers. That makes the reason for the rate increase even more opaque. "Congress has faulted credit-card companies for lack of transparency in raising rates," says William Ryan, a financial industry analyst at Portales Partners, a New York-based research firm. "Bank of America is bringing it to a new level."

An Unjustified, For-Profit Move
Analysts also say they are surprised by the magnitude of the rate raises Bank of America is imposing on affected cardholders. Michael Jordan, 25, a software developer who lives in Higganum, Conn., says he received a letter from Bank of America in late January advising him that his card rate would rise from 9.99% to 24.99%. The software developer, who earns $80,000 per year, says he was "shocked" because his payments had been on time and his credit score hadn't changed in the last year. In fact, Jordan says, he has only $4,500 in overall outstanding credit-card debt on two cards and that, on the Bank of America card in question, he had paid down his balance to $3,000 from $3,700 last August. "His rate increase seems unjustified based on his credit profile," says David Robertson, publisher of The Nilson Report, a credit-card industry trade publication.

When Jordan called Bank of America about the higher rate, he says, the bank representative couldn't explain why his rate was going up. On a second call, he adds, the individual told him the reason for the increase was that he hadn't been paying down his balance fast enough, though he had lowered it by 19% in the last six months and was only now utilizing 54% of his $5,500 credit limit. Riess, the Bank of America spokeswoman, declined to discuss individual rate increases or to list all the criteria the bank was using as reasons to raise rates on existing cardholders.

Analysts say the bank's move is obviously aimed at shoring up profits. On Jan. 22 Bank of America reported a 95% decrease in fourth-quarter earnings due mostly to increases in loan-loss reserves for consumer credit, including rising card charge-offs and write-downs in mortgage-related securities. Bank of America faces another profit sinkhole with its pending acquisition of troubled Countrywide Financial (CFC). Portales' Ryan notes that boosting rates on existing credit-card holders is one of the quickest levers a bank can pull to try to boost earnings.

Anticipating Charge-Offs
Bank of America hasn't made it easy for consumers to reject the new rates. The letters require that consumers write Bank of America to agree to no longer use the card and pay off the existing balance at the old rate—they can't telephone to do so, nor does Bank of America provide a form or a return envelope. Moreover, consumers don't have much time to respond. Cardholders say they got the letters in the latter half of January: four of the letters obtained by BusinessWeek require a written response by Feb. 19, while the fifth requires a response by Feb. 29. If the company doesn't get a response by those dates, rates automatically rise. A response, of course, assumes consumers read the letter from Bank of America as they sort junk mail. "It's a reasonable assumption that most don't," says Karen Gross, a legal scholar on consumer credit and president of Southern Vermont College.

Bank of America also benefits from consumers who do write in an agreement to pay off balances at the old rate and not use the card again, says Nathan Powell, a credit analyst at New York-based research firm RiskMetrics Group. The bank, he says, is clearly trying to protect itself from worsening credit-card charge-offs ahead, something analysts widely expect in the card industry as the economy deteriorates. Powell says the bank must have identified a list of other credit criteria besides FICO that it is using to screen cardholders and determine it's no longer worth new business if they don't accept the higher rate. So far, Bank of America's charge-off rates have risen in line with the credit-card industry, up to 5.08% of receivables at the end of the fourth quarter from 4.57% a year ago. "The bank doesn't want to get behind the curve," Powell says.

"Unacceptable" Hikes
Bank of America is trying to get ahead of Amanda Pennington, 29, of Euless, Texas. She says the bank raised her credit limit three months ago from $5,000 to $8,000 because of her strong payment history. Then she got the letter from the bank in mid-January notifying that her rate would rise from 15.74% to 25.99%. When she called, she says, the bank told her it was raising her rate because her balance was now too high, though it was still under the higher new limit the bank had previously granted. After paying tuition for a community college course, transferring another balance, and paying for daily expenses, Pennington's Bank of America debt now stands at $7,500. Bank of America declined to comment on individual customers.

Adam Levin, CEO of Credit.com and former head of New Jersey's Division of Consumer Affairs, says he is surprised Bank of America would risk bad public relations with its rate increases, given the congressional hearings in December. The bank risks alienating new customers and existing ones by being so brazen, he says, adding, "Either Bank of America has more financial troubles than it is willing to admit or it has a level of institutional arrogance that is unacceptable."

Berner is a correspondent for BusinessWeek in Chicago .
Anonymous Coward
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02/08/2008 08:41 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Sucks, but if you read the fine print in every CC contract, you will see they have the right to adjust your interest rate upward with a simple notification to you.

Simple solution. Don't use BoA for anything and use a credit card as a charge card, which means paying off your balance in FULL each month.
Anonymous Coward
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02/08/2008 08:41 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
I love that last line.

"Either Bank of America has more financial troubles than it is willing to admit or it has a level of institutional arrogance that is unacceptable."
Anonymous Coward
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02/08/2008 08:42 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Yup.

They jacked mine up from 3.99% to 25% a couple months ago.

So I paid it off, called them up, and told them to cancel it.

"But! Why???", they said.

Friggen idiots. Now they'll just go broke even faster.
_Storm_

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02/08/2008 08:44 AM

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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Simply amazing.
Anonymous Coward
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02/08/2008 08:46 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Even in this market, I suspect alot of banks will be able to offer more competitive rates, below 24.99%! BOA is reeling.
Anonymous Coward
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02/08/2008 08:47 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
I love it! The moves they make only hasten their undoing. F.B.O.A.
Anonymous Coward
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02/08/2008 08:48 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
They did this to my card a while ago without my knowledge.

I called BOA to tell them they better send someone to break my legs because I wasn't paying.

The guy was like 'Excuse me, sir?'
_Storm_

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02/08/2008 08:49 AM

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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Even in this market, I suspect alot of banks will be able to offer more competitive rates, below 24.99%! BOA is reeling.
 Quoting: Anonymous Coward 370026



Yes, and for those that cannot pay it off right away, transfering the balance to one of those companies may not be a bad idea.

Still, keeping the balance paid off if at all possible is the best idea. If you can, hell, use your rebate, or whatever other means to get it paid off.
Anonymous Coward
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02/08/2008 08:49 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
dont have credit cards, but I got my rice and beans, do you?
Anonymous Coward
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02/08/2008 08:51 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
aint this a bitch!! i knew this was too good to be true. These bastards approved me of not one but TWO! of their credit cards - one w/ a 4500 credit line and the other a 5500 credit line. I was thinkin to myself, this is weird beccause i just came off the 7 yr bad credit time period. And IM starting to building my credit. Why would they give me a 10 grand line ?

fucking bastards!
Sireen-reborn

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02/08/2008 08:54 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
My Best Buy and HSBC cards were both hiked to 29.99%!
anything after 'but' is bullshit!

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"Once you open your mind to the possibility of conspiracy, you then see conspiracy in everything." [link to deadbydecember-sireen.blogspot.com]
Anonymous Coward
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02/08/2008 08:55 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Can someone please explain to me:

Lets say you bought a TV using credit card the for 1,000 bucks today.

[1] Under old rate how much do you pay in 1 year time?

[2] Under new rate how much do you pay in 1 year time?
_Storm_

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02/08/2008 08:58 AM

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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Can someone please explain to me:

Lets say you bought a TV using credit card the for 1,000 bucks today.

[1] Under old rate how much do you pay in 1 year time?

[2] Under new rate how much do you pay in 1 year time?
 Quoting: Anonymous Coward 12283




This may help you figure it out.


[link to www.bankrate.com]
Xare

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02/08/2008 08:59 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
lol @ a quarter % interest.
repenting backslider
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02/08/2008 08:59 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
this is usury

preying on the weak

fraud

judgment begins at the house of God
Anonymous Coward
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02/08/2008 09:02 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Can someone please explain to me:

Lets say you bought a TV using credit card the for 1,000 bucks today.

[1] Under old rate how much do you pay in 1 year time?

[2] Under new rate how much do you pay in 1 year time?




This may help you figure it out.


[link to www.bankrate.com]
 Quoting: _Storm_



Thanks for the above respone _Storm_

However, it hurts if I start to think, could you please use the above link and answer the above 2 questions.

Thanks.
Anonymous Coward
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02/08/2008 09:03 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
this is usury

preying on the weak

fraud

judgment begins at the house of God
 Quoting: repenting backslider 370134


Jesus used to say things like that, so they nailed him to a cross.
Anonymous Coward
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02/08/2008 09:03 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Thing I don't get, is that normally, they jack up the interest as the article says, for those with a poor credit rating. To m, it seems counter-intuitive to make people with a poor credit history pay more. Its as if they know that these people may have problems in paying, or because of their history, are desparate enough for credit to be willing to pay a ridiculous amount of interest. Either way, its a scam, because its just another way to keep the poor poor, those with bad credit to stay in bad credit, cc are an overall racket and not neccesary.

If you need a cc, get one that is based on money you put on it. Same convience as a cc-renting a car, hotel room, internet purchases-but without any interest. Maybe a 5.00 a month charge to keep the account open. You control the amount as it acts like a debt card.

Best way to build credit is to buy a car, pay it off, or just be on time with mortgage payments. Other than that, cc are just an evil tool and have caused more heartache than salvation to all of us.
Anonymous Coward
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02/08/2008 09:06 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Can someone please explain to me:

Lets say you bought a TV using credit card the for 1,000 bucks today.

[1] Under old rate how much do you pay in 1 year time?

[2] Under new rate how much do you pay in 1 year time?




This may help you figure it out.


[link to www.bankrate.com]



Thanks for the above respone _Storm_

However, it hurts if I start to think, could you please use the above link and answer the above 2 questions.

Thanks.
 Quoting: Anonymous Coward 12283


My God. You must be a graduate of the pooblic skool system.

1,000 X 0.99 (9.9%) = $99

1,000 X .25 (25%) = $250
Free Store
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02/08/2008 09:07 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Cards have their privileges and so does freedom
Anonymous Coward
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02/08/2008 09:08 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
I received a letter too
Anonymous Coward
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02/08/2008 09:10 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Lets see the J man knocked over the money changers tables back in the day which were the banks , would he knock over wall street today?
1-2-Follow

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02/08/2008 09:15 AM

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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
they've been doing this. i have never had a late payment or anything. i had a balance transfer at 15.99%. i thought that was fairly reasonable but still a little high. little did i know that if i used the card they charge 15.99% for the tranfer interest and a separate 15.99% for the purchases.

now they have jacked both of my interest charges up to 24.99%. should be illegal. i am getting a loan from a local bank to pay that shit off and be done with BOA for good.

best advice: never get a fucking credit card. i just didn't listen.
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Anonymous Coward
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02/08/2008 09:19 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
only use credit to buy a house, if you can't afford it now, don't buy it!

Simple.
Richard Strong

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02/08/2008 09:24 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
After reading Op's article i hurried online and checked my BOA statements to make sure they didn't screw with my interest and thank GOD them fuckers didn't! They tried that once without me knowing and i gave them hell and told them to cancel my card. After kissin my ass i about the mistake i said i still wanted to cancel unless the lowered from the 11.99 to 9.99 and they did. Weird thing that i noticed though...they up'd my maximum from 12,000 to 15,000??? Wtf?
I am Richardus Strongus. Father to a murdered 'Refreshtard' thread, Husband to a deleted Top 10 thread. I will have my vengeance on the Lightworkers ..in this life or the next.
Anonymous Coward
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02/08/2008 09:25 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
yeah this happened to me and I transferred the balance to a 0 % card..

one month later BofA sends me an offer for 6% interest.

Thanks to Gov't businesses can do whatever the hell they want.
Grafted Promise
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02/08/2008 09:26 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
We do use CC but always pay the balance in full. My husband tried to get the credit limit reduced after they hiked it unilaterally ... no can do! What a joke.

Well, they's the ones that will have to cover any CC fraud as I keep all the reciepts of our use. Keeping our limit above what we want it to be is their loss then.
Anonymous Coward
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02/08/2008 09:27 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
aint this a bitch!! i knew this was too good to be true. These bastards approved me of not one but TWO! of their credit cards - one w/ a 4500 credit line and the other a 5500 credit line. I was thinkin to myself, this is weird beccause i just came off the 7 yr bad credit time period. And IM starting to building my credit. Why would they give me a 10 grand line ?

fucking bastards!
 Quoting: Anonymous Coward 250177
Anonymous Coward
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02/08/2008 09:32 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
Can someone please explain to me:

Lets say you bought a TV using credit card the for 1,000 bucks today.

[1] Under old rate how much do you pay in 1 year time?

[2] Under new rate how much do you pay in 1 year time?
 Quoting: Anonymous Coward 12283


The % rate is per annum, compounded daily. What this actually means is that they take the percentage rate, divide it by 365 days, and apply that interest every day (it actually works out you pay more that the stated percent over a year, but it's fairly close)

so 25% / 365 = 0.0685% per day
so if you have $1,000 debt then on
day 1 you owe 1,000
day 2 you owe 1,000.68
day 3 1,001.37
day 31 1,020.75
day 100 1,070
day 365 1,198

That's only on $1,000 if your cc debt is into the multiple thou's you could be paying more than $100 a month without reducing your debt at all.
Anonymous Coward
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02/08/2008 09:34 AM
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Re: OMG !! WTF !! BANK OF AMERICA IS HIKING CREDIT CARD RATES from 9.99% to 24.99 !!!! PIN THIS !!
If people really knew what these large banks were doing to people, they wouldn't use them.

I used to work in a bank and I know firsthand that their goal is to screw peoples accounts to charge them fees. It really is based on greed. Also, the large banks do not pay much for savings.

I have seen that most of these large banks now prey on the urban class and those without financial knowledge.

I will keep my credit union for the rest of my life. I don't trust any bank, but having worked in the industry, I urge most of you to look into credit unions. Primarily Navy Federal Credit Union, USAA, or another union that used to be for the military. I've had the same 10% rate on my card for many years. I don't carry a balance so I really don't care about the rate. They have lower rates, but I'm too lazy to get mine reduced. Like I said, I don't carry a balance so the rate isn't important to me.

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