Bank of America's New Credit Card Penalty Interest Rate Is Nearly 30%

Bank of AmericaBank of America credit card holders, beware. If you're late on a monthly payment, that little "oops" might become a big "ouch": Your future balances could be subject to a penalty rate of nearly 30%, notes a report Wednesday in The Charlotte Observer. The penalty rate will not be applied to previous balances, however.

Nor will the penalty interest rate be applied automatically, the article notes, but rather on a case-by-case basis after other risk factors are considered. And, if the bank does chose to hit an account with the penalty rate hike, it will give the customer a 45-day heads up before the new rate goes into effect, as required under 2009's Credit Card Accountability, Responsibility and Disclosure Act, otherwise known as the CARD Act. Bank of America (BAC) began notifying customers about the penalty rate increase via their bills this month: Those who are affected soonest will see their rate increase coming afterJune 25.

The penalty interest rate can scale up to a maximum of 29.99% on future balances, and card holders will have their accounts reviewed every six months as required by the CARD Act for potential reductions in the penalty rate, BofA spokeswoman Betty Riess told DailyFinance.

Before the CARD Act went into effect, consumers faced an interest rate death spiral with their credit cards, Greg McBride, a senior financial analyst with, told DailyFinance.

"Prior to the CARD Act, penalty interest rate increases were a one-way ticket," says McBride. "Now, they have to review them every six months. And while the requirements are still kind of loose, it's a step in the right direction."

He added another major change that came out of the CARD Act is that any penalty interest rate increases can only be applied toward future credit card balances and not existing balances, unless the payment is delinquent by more than 60 days.

The bank's adoption of a penalty rate follows a path that other financial institutions have taken since the late 1990s, according to a report. Back in 1998, for example, the average default rate hovered at 22.75% and remained in a relatively tight range in the years that followed, reaching as high as 25.28% in 2009. But despite the passage of the CARD Act, penalty interest rates have continued to climb.

Last summer, banks were charging an average median penalty interest rate of 29.99%, according to a report. That puts Bank of America squarely in the middle of the pack with its competitors. If it's any consolation to their customers, noted last year that HSBC's penalty rate had exceeded the 30% threshold -- topping out at 31.99%.

To avoid those penalty interest rates, credit card users simply need to make payments on time, advises McBride.

Says McBride: "People complain about the penalty interest like they complain about speeding tickets. If you don't want the ticket, then don't speed."

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Joseph Becket

Bank of America is a great company, but like many nationwide businesses it can have some weak spots. I was surfing the internet and I found this site where people can vent about poor customer service or products they received... it can get really funny. I would recommend you to check it out here:

August 15 2011 at 2:03 PM Report abuse rate up rate down Reply

When I think of Brian Moynihan or Barabra Desoer, I think of the song by John Lennon called Piggies:
So if it walks like a piggy, talks like a piggy, by golly it’s a PIGGY!

BofA and it’s CEO Brian Moynihan reminds me of that song by John Lennon and George Harrison titled "Piggies" I invite you to listen to this song on youtube and see if it appropriately fits.
Have you seen the little piggies
Crawling in the dirt
And for all the little piggies
Life is getting worse
Always having dirt to play around in.
Have you seen the bigger piggies
In their starched white shirts
You will find the bigger piggies
Stirring up the dirt
Always have clean shirts to play around in.
In their ties with all their backing
They don't care what goes on around
In their eyes there's something lacking
What they need's a damn good whacking.
Everywhere there's lots of piggies
Living piggy lives
You can see them out for dinner
With their piggy wives
Clutching forks and knives to eat their bacon.

When I filed my lawsuit against Bank of America, I thought of the many others out there in the same situation. It was then that we decided to educate the public on what these piggy banks are doing, as well as unite us all together as one voice. Please help me turn this David vs. Goliath modification process, into a Goliath vs. Goliath.
Please stand with me and Brookstone Law Firm, and send an email to Bank of Abusing America that states that we will no longer tolerate their potentially illegal, fraudulent, irregular and abusive business methods.
So please send your email directly to Bank of America and include the following:
1. Your name
2. Your complaint concerning your experience with Bank of America.
3. Please end your email “I support John Wright vs. BofA Lawsuit!”
4. Please send a copy of your email to
5. Please send your email to BofA CEO Brian Moynihan:
I have created for all of those who have been abused by Bank of Destroying Americas potentially irregular, fraudulent and simply abusive home loan modification process.
Divided we might have fell America. UNITED WE MUST STAND!
My name is John Wright AND I AM FIGHTING BACK!
John Wright

July 19 2011 at 9:33 AM Report abuse rate up rate down Reply
Missy Helton

BoA are complete crooks. I was a loyal customer who never paid late but had to carry a balance after grad school plus a divorce. They just added a yearly fee to my card so I cancelled it... American Express actually just decreased my rate and Ive always been happy w them. Say what you will but I like Amex...

May 16 2011 at 11:42 AM Report abuse rate up rate down Reply

Bank of America is the biggest bunch of crooks there are!! I can't say enough bad about these thieves!! Absolutely the very best example of corporate greed!

May 03 2011 at 11:06 AM Report abuse +1 rate up rate down Reply

my credit card company never charges me any interest or fees. I just pay the bill each month and thats it.

May 03 2011 at 9:37 AM Report abuse +1 rate up rate down Reply

take the credit cards away from the poor people.

May 03 2011 at 9:35 AM Report abuse +1 rate up rate down Reply

Home Depot uses BOA credit card promos..................avoid Home Depot, BOA just wants to screw up your
fianancial affairs !

Avoid all BOA of business, best way to say " You are Immoral and Ugly" !

May 03 2011 at 8:35 AM Report abuse +1 rate up rate down Reply

American Express has been doing this for years. Why are there no negative comments about that "Sacred Cow" .

May 03 2011 at 7:10 AM Report abuse -1 rate up rate down Reply

the international banks have owned you all your life....

May 03 2011 at 6:24 AM Report abuse +1 rate up rate down Reply

Ha, I will not be applying for, or accepting any offers for a BofA credit card ever. Furthermore, I am one of those old farts who absolutely refuse to get money from an ATM that isn't my bank's. I get a kick out of people getting up to a BofA ATM, chest expanded wide, look at me know, inserting their ATM from another bank and getting socked with the $3.00 charge. Those are the people, the ones who patronize that bank's behavior, who help them take advantage of us. There is something called boycott, but no one seems to take advantage of it. Cheers to you. I have my credit union application ready and a hefty deposit, as soon as my bank takes me hostage, I am switching. Come to think of it, maybe I will switch anyway.

May 02 2011 at 11:06 PM Report abuse +1 rate up rate down Reply