Is It Legal For Bank of America to Raise My Interest Rates? – Lucy

Lucy wrote to me through the GetOutOfDebt.org site and asked the following question. If you have a credit or debt question you’d like to ask just use the online form. I’m happy to help you totally for free.

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“Dear Steve,

Have been advised about Bank of America raise in interest rates. I have never been late on a payment. Would like to be part of class action suit.

Is this legal?

Lucy”

The Answer:

 

Dear Lucy,

The only Bank of America class action lawsuit I am familiar with is the one I previously wrote about, “Bank of America Hit With Class Action Suit Over Credit Card Fees And Charges.”

That suit was about payment posting issues.

Is it legal for a creditor to raise your rates at any time and to any rate? Sadly, yes it is. As long as the creditor provides you with at least 15 days written notice, the rates can be changed.

If you actually read the terms and conditions that come with your credit card, or any credit card, you will find that creditors do a very good job of explaining this fact. But most people don’t read the terms and conditions.

Big Hug!

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  • Kat

    Steve,

    BOA has changed my fixed rate of 7.9 to a variable rate that is (currently) the same rate as my fixed rate. Due to the fact that the rate if the same, BOA says I cannot “decline” the rate change and close my account. I asked if I could close the account later if the variable chanes and the rep says “no, because you will already be on a variable rate so THAT is not something you can decline.” Can they legally do this?

    Kat

  • Laurie

    Unfortunately the new laws will come too late. I just received notice that the FIXED rate (5%) that I have had for 8 years is becoming VARIABLE at 11.5% for now. What other options do we have if we have a high balance?
    If it impacts the credit score negatively to freeze the account at the lower interest rate, is it better to try another card, freeze the interest, etc.
    What is the best possible manner for Bank of America NOT to get so much of our money?

    • http://GetOutOfDebt.org Steve Rhode

      Laurie,

      Unfortunately carrying a high balance on a card is a bit like Russian roulette. In the past there was only one bullet in the gun, these days there are three and your chances of losing are much higher.

      You see, banks might be arrogant, but they are not stupid. They know that people with high balances are most likely stuck on their card so they got you. Your three choices to get out are to pay the balance off in full, call the bank and beg for a lower interest rate, or look for a low rate balance transfer card and move the balance. The problem with the transfer option is that you’ll never know if you’ll get a credit limit high enough to transfer the balance until you apply.

      If you do decide to go the apply for new card route then I urge you to check your consolidated credit report and credit score in advance. Make sure it is looking as spiffy and clean as possible so you can get the best rates and offers. This consolidated credit report is the same one I use and love. The credit score option even tells you exactly what you have to do to raise your score.

      If you did do the other card option you’d have to read the terms and conditions very carefully. Make absolutely sure that closing the card won’t kill the introductory rate offer. I bet it will.

      Now, your last question, I love it because the answer is so simple. The best possible way for Bank of America or any bank to not get so much of your money is to not carry debt. Even the 0% balance transfer offers can be a trap because banks know that most consumers will not pay off the debt within the introductory rate period.

      Steve

  • FinePrinter

    Incorrect advice!

    If you reject changes, the interest rate stays the same. But this is ONLY if you stop using the card.

    • http://GetOutOfDebt.org Steve Rhode

      That is true, but the account will be closed and that can negatively impact your credit report as it closes the door on that history which can lower your credit score.

      The good news is that new laws will begin in 2010 that will reduce the impact or ability of easy rate changes.

      Steve

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