Earlier this week, Bank of America unveiled its new credit card, along with a financial incentive for customers to both pay their bills on time and pay more than the minimum due. Those financial incentives could equate to around $120 annually for customers who play by the rules of the game.
Company spokesman Titi Cole said that customers had voiced their desire for a credit card that both reinforces good payment habits while rewarding them for responsible credit management. That’s great, except that many are wondering why consumers must be rewarded by their banks for doing what they’re contractually obliged to do. Consumers who play by the rules are already rewarded with stronger credit scores, better buying power and lower interest rates.
More Good News
Still, the new credit card is attracting attention. It was shaping up to be a good week for the bank, especially when the results of stress tests were released for the nation’s biggest banks. Of course, it couldn’t have lasted long in the land of powerful public relations and marketing ploys.
Bank of America easily managed to surpass the generally accepted regulatory capital standards that the Federal Reserve requires. What this means is the bank should have no problems weathering what the Fed refers to as a “deep recession”. The specifics cover certain testing efforts that assessed whether the banks, in the state they are in today, could better withstand the 2008 recession. Bank of America had a minimum of 6.8% of capital set aside under a measure called Tier 1 common ratio, which easily places it above the generally accepted standard of 5%. The scenario also includes the possibility of a 12% unemployment rate in the U.S. and what kind of losses the banks would incur; for BoA, it would theoretically lose $52 billion with loan losses of $58 billion.
Of course, it was reiterated several times during the announcement that there really is no pass or fail since those dynamics aren’t in place, but rather, the testing was designed to show a “what if” type of scenario. Here’s the kicker – what was released earlier this week is just a partial reveal and some are saying the truth comes out on March 14, when the results in their entirety will be released. Those results could reveal more realistic numbers. Still, Bank of America held its own, especially when compared against its competitors. In fact, it fared better than some of its biggest competitors.
Picking up the Pieces
So with these two events this week, the argument could be made that the bank is finally beginning to rebuild its troubled reputation (think the Countrywide buyout and the controversial bail out in 2009). And of course we can’t forget it was Bank of America that set the wheels in motion for the Occupy movement that continues to this day. It was that announcement that it would institute a $5 debit card fee to its bank customers who were considered “middle income” that caused such an uproar. Millions of bank customers from several of the big banks dropped them like hot potatoes in lieu of their local credit unions.
And Then This
Now, just as the bank is breathing in the good publicity, this happens:
A Bank of America customer found on his credit card statement a charge of $212.50 and it was showing up each and every month and had been for quite some time. (This story is proof that carefully reviewing your monthly statements in this day and age is an absolute must). He’d already paid more than $4,000 for this Credit Protection Plus that BofA tacked on. The credit card customer says he never signed up for this. When the bank said he indeed did, the customer asked for proof. The bank has yet to provide it. The question is why not? There’s an old saying that those with nothing to hide, hide nothing – so what gives Bank of America?
The fact is, this happens all the time with many credit card companies and banks. It’s just part of doing business. The difference is, when a consumer complains, these same credit card networks and banks almost always quickly remove the charges. It rarely, if ever, becomes a heated feud with the bank or card company insisting that the customer is wrong. And let’s face it – that’s almost always the kiss of death for any business that insists the mistake isn’t its fault. Unless, of course, you’re one of the biggest banks in the nation.
So apparently, there’s a tape that has his voice agreeing to the credit protection program. And isn’t it ironic that this man has this kind of protection and he needs to use it, but can’t because the company that offers the protection and the company that’s being accused of illegal activity are one in the same? Sort of redefines irony, yes?
Check Your Monthly Statements
For nineteen months, he’s had these charges tacked on each and every month. Granted, he should have been monitoring his monthly credit card statement but let’s face it – there are no rules or laws that demand consumers babysit their banks to ensure they’re not ripping them off. The “check your monthly statement every time it hits your mailbox” rule is not mandatory. It’s strongly encouraged, but not mandatory. It really doesn’t matter, when it comes right down to it, whether or not this guy tossed his statements into a pile on the counter – he says he didn’t authorize it. The bank says it can prove he did, but won’t pony up that proof. This can’t be good for the new image the bank is trying to put into place. In fact, if this story goes viral (and really – isn’t the possibility of bad PR going viral the new worst enemy of any company?), the $4 grand credit will seem like pennies in a five year old’s piggy bank compared to what could happen if the media hits back heavy. We’re on to it. Forbes is on to it. And did we mention the Los Angeles Times is asking questions? Specifically, it wants Bank of America to acknowledge that failing to present this so-called evidence is likely proof that it won’t stand up to scrutiny, and that will most certainly put the customer at an advantage. The question now is: does the bank really have proof or was it just calling his bluff? We’ll let our readers decide.
A recent report tells the tale – a full 25% of credit card consumers have been victimized by fraud; specifically, they’ve been victimized by credit, debit or prepaid card fraud. This survey, courtesy of ACI Worldwide, polled more than 5,000 consumers. The last thing any of us want is to feel as though we’re having to protect ourselves from our own banks. Stories like these aren’t common, but the fact that it’s possible should be enough of an incentive that we would want to protect ourselves. This one story is why it’s so important to check your credit card statements – every single one of them, and every single month.
Have you ever had a run in with your credit card company over credit protection plans? Did it remove the plan after the first request, or did it take time and effort? Share your story with us – we want to hear it.