Posted by
DecoNservAtiVE on Wednesday, April 02, 2008 3:46:12 PM
My information is from a Bank of America insider who wishes to remain anonymous due to their work within the company. On April 19th Bank of America is going to begin a new “repricing” strategy with regards to customer interest rates. I’ve done some research and none of this seems illegal, but I question the morality of the “repricing” strategy. The repricing strategy will raise the rates of accounts who combine two defaults in any combination of Late Payments or over limits within a 12 month period. This strategy would reprice the offending accounts by adding the highest prime rate within the last 90 days (i.e. If highest prime rate is 9% and offending account interest rate is 11%, the repriced rate would be 20%).
On the whole, this doesn’t sound like a bad plan until you take into account the standard practices of the bank which generally result in infractions of these types. Bank of America routinely sends out mailings with checks, vouchers or special interest rates to card holders who are approaching their limits. The bank also monitors card holder credit reports and looks for other cards or debts being paid. Bank of America will lower the card holders limit if they see other debts being paid, causing the account to go over limit.
Currently the bank will send out an Opt out letter to the customer which gives them the right to opt out of their repricing if the customer replies or calls within 30 days. Once this repricing strategy takes effect the bank will only give the customer 5 days from the date the letter is created, not mailed or received to reply. The typical time frame for a letter to leave Bank of America’s outprocessing department and be mailed is 3 days. If you consider that some of these mailings must go across the country and are not sent overnight, I wonder how we can consider the timeframe fair.
This is not Bank of America’s first step into the obscenely unfair and questionable practices. Last year Bank of America profits rose nearly 30%. The banks’ CEO Ken Lewis received a $56 million dollar bonus. Employees within the company did not receive their traditional yearly bonus. Even as a conservative I have to question the ethics involved all over with this particular bank.