October 8, 2009
-
News: Wells Fargo Raises Interest Rates
It doesn't look like some of our nation's banks are willing to follow the positive example of the second largest U.S. credit card company, Bank of America. Wells Fargo & Co announced on Wednesday that it has plans to increase credit card interest rates. A 3 percent hike in interest is expected to affect the majority of Wells Fargo's card accounts. The announcement came just after Bank of America announced that they will hold off on raising rates until after the implementation of the new credit card reform legislation that is scheduled to become effective in February, 2010. Cardholders were notified by Wells Fargo that the increase is scheduled to take effect on November 30th. Upsetting to some lawmakers who have asked that the effective date be moved up to December 1st. Wells Fargo's move clearly is an effort to get a jump on the new law that will place stiffer boundaries on banks regarding raising interest rates and charging fees.
Wells Fargo's Kevin Rhein, Head of Card Services, maintains the move is not associated with the activities of Congressman Barney Frank (D-MA), Chairman of the House Financial Services Committee. The Congressman is the driving force behind the movement to move up the effective date on the credit card reform legislation. According to Rhein, the company has considered raising credit card interest rates for some time. The move is being made because the company cannot remain competitive at current pricing while continuing to offer more credit.
Wells Fargo, the 8th largest U.S. credit card company, borrowed $25 billion of taxpayers' money in the government's bailout program earlier this year. Wells Fargo acquired Wachovia, the nation's fourth largest bank in market value after a tense battle with CitiGroup in fall 2008. The merger was completed on January 1, 2009. The interest increase will not affect Wachovia's accounts acquired in the merger. New accounts opened with past year will also not be affected by the increase.