October 14, 2009
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B of A Reintroduces CC Membership Fee, Pt.1
Interest rate increase out; fees in.Bank of America Corporation (BAC) recently announced its intentions to cooperate with lawmakers by not implementing any new interest rate changes to its credit card accounts prior to the enactment of new legislation; however, the company has found another way to fill the pockets of its stockholders. Bank of America intends to refresh the credit card annual fee. The company's plan includes test marketing what they are calling the "membership" for select markets. The plan is that if these customers don't raise concerns and complaints about the fee, all of Bank of America credit card accounts will be slapped with a membership fee.
Although Bank of America has boasted no annual fees for some time, several other credit card companies have indeed been charging annual fees. Many of the higher reward cards come with the trade off price; however, in some cases, consumers who maintain high amounts of monthly transactions most likely find that the rewards far out weight the fee. For many consumers especially retirees and lower economic income families, the annual fee is likely to bring added hardships. Additionally, credit card issuers like First Premier Bank and Centennial who target subprime customers with bad credit, typically charge a one-time setup charge as well as an annual fee up to as high as $84.
The new credit card reform legislation that was signed into law in May by President Barack Obama, was designed to protect consumers from this type of predatory practice. However, banks have been finding loopholes in the new law to make changes to terms and conditions of card contracts. Many lenders have changed interest terms from a fixed rate to a variable rate ahead of the law because limitations on raising interest rates only pertain to fixed rates. In looking at some of the changes, consumers will notice interest rates are written as the rate plus prime. This means that the cards current rate of interest will most likely double and in some cases triple.