B of A changes terms

Over a year ago, I blogged about how Bank of America was changing the terms of my credit card agreement because they'd acquired MBNA, with whom I already had an account.

Now they're changing the terms of my other BofA credit card. I resisted closing the account because I've had it the longest, so it's responsible for a good chunk of the "length of credit history" part of my credit score. But after reading the document they've sent me, I think now I have to close it after all.

The changes to my credit card agreement:

1. Reclassification of balances and transactions
They spend a full page telling me how they're reclassifying balances into three categories; balance transfers, cash advances, and purchases. Then, late in this large section about reclassifying balances, they mention that they're raising my APR on balance transfers.

2. Default pricing
This one's fun. They're not changing my standard APR, they say, but they're raising my default rate. That means if I'm late making a payment or I exceed my balance twice in a twelve month period, they raise me to a newly-hiked default rate.
With this one, I can reject the new default pricing by writing a letter and sending by mail to an address provided. I can't reject the change electronically, by telephone or via the web. So if I don't read the 8 pages of fine print they sent me, I wouldn't know the top-secret adress to use to request that BofA honor their original written credit card agreement with me.

3. Calculating variable rates
Instead of using the prime rate at the end of the month to determine a variable rate, they will now set the prime rate to the highest published prime rate in the preceeding three months.

4. Transaction fee finance charges
They're "changing how (they) refer to certain transaction fees currently applicable to (my) account." Oh yeah, they're also raising the transaction fee for cash advances, balance transfers, and direct deposits.

5. Additional changes to my agreement
Barrel of laughs, this document. They're changing the terms of "my agreement." Without me having to agree to the changes. I also love how they lump a half-dozen changes to the way they calculate my finance charges into a category called "additional changes." They've also tacked on to the bottom of this section a simple 2-sentence change:

An important Amendment to the Arbitration and Litigation section of your agreement follows.

Unless otherwise noted, we are making the Amendments to this Notice primarily because of a change in our business practices.

Oh. Okay then. I wouldn't want to stand in the way of your "business practices." Go right ahead and change the Arbitration and Litigation section of my agreement. But don't bother asking me if I agree. I couldn't possibly understand the complexities of your "business practices." Best to sneak the changes by me in a 8-page wad of fine print.

I've said this before, and now I'll say it again; this is crap. I signed a credit card agreement. The terms were clearly laid out, and I agreed to them in writing. And now they're being changed in at least a half-dozen ways, all detrimental to me. I can't find a single change to the agreement that is in my favor. That's okay, though. I don't ask B of A to amend the agreement to benefit me in any way. I agreed to the original contract, the one I signed.

Here's another thing I've said before; if Sens. Levin and McCaskill want me to endorse the "Stop Unfair Practices in Credit Cards Act," all they need is a provision requiring creditors to honor their signed contracts with their borrowers.

For the sake of the blog, and as a learning exercise, I'm going to send the letter rejecting the new default pricing amendment, and see what kind of response I get. Once that shakes out and I've posted my take on it here, I'll close the account and be done with B of A for good. (Some may remember that I dropped my checking & savings accounts with them when they ruined online bill pay.)

Comments

[Mary]

We got a lovely letter from them as well. I did not know what to do. Reading your post has convinced me to send a rejection letter. Can they still raise the rates? I am currently making more than the min. payment and have done so for over year. Last month we went through a busy time and missed the payment timing by like a 1/2 hour. So now I have a "mark" on my head. No credit due for trying to make a higher payment each month. If I close the account which we have not charged any purchases on it, will they still jack my rate up?

[Joseph Onesta]

Jeff, It's good to see that you are still going strong and I think this blog of yours is terrific. Thanks for keeping us all informed.

One of the things I've noticed with some of my financial coaching clients is the resurgence of the two-cycle calculation for interest. This seemed to almost disappear a few years ago with A and B paper lenders but now, even A paper lenders are touting teaser interest rates with the two-cycle billing that, for all practical purposes, doubles the amount of interest paid. They do this to their existing borrower base by offering a more prestigious card--more available credit, "lower APR" but no one is reading the fine print. And they don't realize that they are actually getting a different account which is being offered under different terms.

[Beebee]

Thank you for this informative information. Got one. Have a great credit history but I still thought it was personal. MBNA was an awful-wicked company. I closed my account with them years ago, happily, over a small matter but a matter never the less. I have never been late on any cards so this notification will not affect me I do not believe. Still, it is insulting. I guess BofA is adopting MBNAs nasty business habits after all. Oh well, everyone else in California is switching to Washington Mutual. Maybe after 25 plus years with BofA, it's time for me to consider a switch also! Let us know what response you get!

[Jeff Michael]

Mary, I'm sure they will raise the APRs, but if you do close the account and make all your payments on time, you probably won't have to pay any extra. Since the newly-raised rates are for the default rate and cash advances, it won't affect us if we have no defaults or tranfers.

I for one am going to make sure I don't have any transactions of any kind with them again.

Joe, thanks for the tip; I'll mention it in a separate post so no one misses it.

Beebee, I like to believe I build a relationship with my bank over time, so it's hard to cancel accounts and start fresh with a new creditor. Unfortunately, BofA doesn't value the customer relationship they have with us, so I think moving on is the right thing to do.

Another creditor I've long supported as fair to consumers is contemplating selling off their credit card business, if they do that, I'll have to cancel my account and recommend against them. I won't name them yet, but if they do go forward with this sale they're considering, I'll be sure to post about them.

[Kris]

Maybe we should write them back and unilateraly change the terms to terms more beneficial to us. We can even give them a provision in mice-type that would let them opt-out of a provision or two --provided they responded in writing by certain date.

[P Tran]

Does anyone still have the address to write the letter to refuse the change in terms? I never received the notice of change in terms, but received a follow up as of today. I would still like to try to write a letter to them. Thanks.

[TIPS ABOUT BUSINESS CREDIT]

With the European leveraged loan market in the midst of repricing, the cost of swapping sterling exposure into euros and dollars may be key for the 9 billion pounds of debt backing the buyout of Alliance Boots , banking sources told Reuters Loan Pricing Corporation.