Michael Mayo, a news columnist at the Sun-Sentinel
, blogged about
his less than optimal experience with Bank of America (Stock Quote: BAC
): "I got a letter from Bank of America the other day. The fine folks at Bank of America wanted to let me know that they were raising my credit card interest rates. Currently, the card has an 8.9 percent fixed annual rate on purchases. I have a credit line of $13,700 and a balance of $1,004. I’ve never been late with a payment. The fine folks at Bank of America, who’ve spent the last few years buying up failed institutions like Countrywide and Merrill Lynch and taking some $163 billion in taxpayer bailout pledges, let me know that as of May, my interest would change to a variable rate of 14.65 percent annually. From a fixed 8.9 percent to a variable 14.65 percent -- such a deal! The variable rate will be pegged somewhat to the prime rate plus an extra margin of 10.65 percent. I say somewhat because the current prime rate is 3.25 percent, but the bank's fine print says, as a starting point, it gets to choose the highest prime rate in the previous three months from Feb. 27, 2009. The prime rate was 4 percent in December. The fine print also says it could substitute another index rate at any point. So basically customers are at the bank's mercy. My rate hike -- 5.66 points -- represents a 65 percent increase in interest charges."
He goes on to explain
that while he is
allowed to refuse the offer, pay off the entire balance under the current terms, and close the account, this action could negatively impact his credit score by swiftly reducing his available credit line.Photo Credit: Getty Images