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

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

Yesterday, I wrote that Banks were drastically raising rates on credit cards even if people were just a few days late.  That’s true enough.  But some banks are so desperate and greedy that they don’t even wait for the consumer is late before squeezing them for payment.  And this includes banks who have benefited from TARP bailout money from We the People of the United States.

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?

I am reminded of the movie “Network” where Peter Finch – playing newsman Howard Beale shouted out on-air “I’m mad as hell and I’m not going to take this anymore.”  Click here  to listen.  Maybe it’s time for you to start shouting out too.

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?  

Let’s all say “thank you” to our reader – who requests that she remain anonymous – for following us at Bankruptcy Law Network and for sharing her experience with us as well.
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Jay S. Fleischman is a bankruptcy lawyer with offices in Los Angeles and New York. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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