Bank of America targets people for new fees - SDFinch

Discuss anything related to interest rates & fees, like balance transfer offers, low rate cards, annual fees, etc.
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Bank of America targets people for new fees - SDFinch

Postby sdfinch » Fri Feb 25, 2011 3:13 pm

Bank of America is targeting the people with lower FICO scores. The people who make late payments often and do not have any other relationship with them like car or home loans may be affected.

BofA is calling for people that have an average interest rate of 14%, and according to the bank would not receive any annual fee credit card account with the same interest rate if they were to apply today. Now, the Credit Card Act prevents banks from raising interest rates on existing balances, or raising interest rates within the first year of opening an account, so they’re just replacing higher rates with higher fees.

The Credit Card Act also dictates that card companies can’t impose new fees without giving customers 45 days of advance notice, so this notice will give you time to find a new card if needed.

This means for the people who are struggling and your one who has a low credit score already and may be close to default, it a basically to tactic to get rid of you as a liability to them. If a large portion of these cardholders decide not to pay, and instead to move their balances to other banks’ cards, Bank of America will be left with a much better loan portfolio.

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Postby jeffysdad » Sat Feb 26, 2011 8:12 am

The above may very well be true, but BofA is also alienating some of its customers who do have money. A friend of mine has a well-established small business, owns two homes, just bought a new car and travels internationally every year or two (There's a lot of banking involved with these activities). While he's banked at BofA for years and years (business and personal), he dumped them late last year for CapitalOne. The reason, he said, was fees. Yes, CapitalOne; I couldn't believe it either.
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Postby Mogul of Pineapples » Fri Mar 04, 2011 9:26 pm

When it comes to big banks, at the end of the day most customers probably are too apathetic to switch if they are unhappy. Although many are changing and if the nickle and diming continues for checking accounts, we could see a trend to smaller banks accelerate. My checking has been free with my direct deposit but if that ever changes, I would switch before paying a monthly fee.

And like jeffysdad said, the customers that get upset most about the fees are those who have money and are the most valuable clients. It's not worth charging a customer a $5 or $10 fee here and there if it causes them to jump ship with deposit accounts worth tens of thousands or more.
Disclosure: I am a moderator/paid staff of this site, which does have advertising relationships with some credit cards that are discussed and linked to. Regardless, anything I say is my honest opinion.

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