In a Reconsider Your Debit Card post, we discussed plans by Bank of America to slam a new $59 fee to approximately 5% of its customers. Those customers who make up that 5% are ones the bank refers to as “most at risk”.
Now, it appears the government’s taken notice too. Saying this new annual fee, which begins April 11, “violates the spirit of financial reforms”, one financial committee is calling on the financial giant to take a step back and reconsider not only its motives, but its adamant stance. Bank of America, however, is taking a more entitled approach.
One Bank of America spokeswoman, Betty Riess, said today that these fees are being placed on those “who would not qualify for a new account today“. Then she goes on to say, “They have a choice. They can reject the fee and pay off their account”. This has many of the two million cardholders who will be included in that 5% furious. One cardholder who will be affected says she feels like an “indentured servant” and then goes on to say, “What can I do? I can’t refuse the annual fee. They know I have no choice except to pay”.
Changes in Regulations
Of course, with the new laws that went into effect over the past year, many banks say they can no longer profit from late charges and overdraft fees and that this is just one way they can recoup some of those losses. Those efforts, by the way, means an additional $118 million in revenue for Bank of America, which continues to insist anything short of a court order, it will begin imposing those fees April 11.
The letters are no kinder than Riess’ statement to the press today. The letter says the annual fee is in response to “a review of your banking relationship with us”. Many who received notification say they were unaware of any problems with their “banking relationship”. The bank reiterates that these charges are less about profits and more about efforts to address payments that are too low and/or balances that are too high.
The problem with that reasoning is many are making minimum payments because it’s all they can pay as they continue to recover from the recession. The new fee is just one more burden many Americans are now being forced to shoulder.
700 Credit Score
So how does someone with a 700 credit score end up on Bank of America’s bottom 5%? One woman said she considers her credit ranking “pristine”, but she is carrying around $30,000 in credit card debt. That, apparently, is what triggered a letter being sent to her by the credit card company.
That said, Riess’ suggestion to pay the balance off might just be what many consumers do, especially those with higher scores. In fact, many have already found another credit card and have transferred their entire Bank of America balances over. This surely won’t bode well with Bank of America officials; in fact, it just may defeat their purposes.
Breaking the Law
Some banking experts say this move by Bank of America violates the 2009 Credit Card Accountability, Responsibility and Disclosure Act (CARD Act). Specifically, it prohibits a rate increase on existing balances unless a consumer is 60 days delinquent in making a minimum payment. Still others say it doesn’t violate the law, but it does appear to sideswipe it.
At a minimum, it’s an unfair way to treat credit card holders. The new law was put into place to protect consumers and it seems the only thing it’s managed to do is force credit card companies to become a bit more clever in their tactics. Some credit advisers have suggested that if Bank of America really believes these customers are a higher risk, then close those accounts in the bottom 5% and then work out the payment options.
They also say Bank of America won’t be doing that because it knows it’s turning away revenue. It looks as though the woman with the impressive credit score just might transfer credit card companies and that, say the experts, is the one sure fire way to truly level the playing field: get them (Bank of America) where it hurts – in their profit lines.