Bank of America squeezes its credit card holders – no default necessary. “I’m mad as hell and not going to take this anymore.”

A reader responded to this article and tells me that her bank, Bank of America,  in a move more befitting Tony Soprano than a major money center bank, recently unilaterally raised her interest rate from 6.99% to 14.99%.  Thinking they had invoked the “universal default” provision (incorrectly) she called them to find out why this happened. 

The bank had no reason at all  -  they just arbitrarily raised the interest rate for 14 million customers, and that it wasn’t anything particular about her account that caused them to do this.  

Anyone, even someone with outstanding credit, can get hit with this kind of interest rate increase. 

Our reader says she monitors her data at all three credit reporting agencies monthly, pays all bills electronically in response to e-billing (so they can’t possibly be late), has a good job, good insurance, balances below 30% of available credit, and a low debt-to-income ratio (20%).  She did everything right and nothing “wrong.  She suspects that credit card companies might be “redlining” certain zip codes with high unemployment rates even though she is fully and gainfully employed.

These high interest rates will inevitably lead to more credit card defaults which in turn will inevitably lead to more bankruptcy cases and more losses to the banks.   What in the world is Bank of America thinking?  What in the world are the executives at Bank of America smoking?

Senator Durbin rightfully tells us that “The Banks own the Senate.”  I always thought that the people own the Congress.  Silly me.  Check Senator Durbin’s interview with Chris Matthews.  So if we want banrkuptcy reform and credit card reform, we had better start telling Senators that people vote – banks don’t.  In a democracy, votes ultimately are more important than money – are we a democracy?