November 5, 2009
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News: What Was That You Said, BofA?
Less than one month ago, Bank of America (BofA), the nation's largest credit card company, announced that they would not be raising interest rates on existing customers prior to the enactment of the new credit card reform legislation. Apparently, top management at BofA has either a very short memory or an unethical set of standards because the company has now announced that they will be implementing annual fees ranging from $29 to $99 on select credit card accounts. Many Americans might not see the annual fee as an interest rate increase, however, according to federal regulations; interest rates and annual fees fall in the same category as finance charges.
An additional concept to take into consideration is that not only is the added credit card charge considered a finance charge, the additional fee will also create interest earnings for the lender. So, if the consumer does not pay the entire fee in one payment, the fee will be assessed interest on consecutive months. Even if the consumer were to pay the fee in full, if they maintained a monthly balance, it would most likely have been an additional amount that might have been applied to reducing the current card balance. No matter how you analysis it, the consumer losses and the credit card company has found one more loophole to violate the consumer.
It is unfortunate that a large number of Americans made poor choices in the management of credit card spending. However, equally to blame are our nation's lenders who baited and trapped unsuspecting individuals into believing they were adequately equipped to handle such a responsibility. Of even greater concern is that lenders themselves did a very poor job of managing the business sending the majority of them into financial turmoil. Had it not been for the government bailout programs that utilized the money of the same taxpayers that the financial institutions are stomping on, these companies would now be in bankruptcy court.