Bank of America announced last week that it would be assessing some existing credit card holders a new $59 fee. According to an Associated Press report, BoA began mailing out notices to customers notifying them of the new assessment. A BoA spokeswoman, Betty Riess said that the fee would be charged in customers’ May statements.
About 5% of BoA’s credit card customers will be affected by the fee. The fee, though, isn’t tied to a specific type of BoA credit card product. Instead it is based strictly on a consumer’s “risk profile.” According to BoA’s Riess, affected customers may be carrying balances close to their credit limit, may have “lower-than-average” FICO credit scores, or may make late payments more often than other customers.
On average, the affected customers carry a 14% interest rate on their credit accounts and, according to the AP report, wouldn’t generally be approved for a no-fee account with BoA under current credit-market conditions.
Under new federal credit regulations that went into effect last year, credit card issuers must give customers 45 days notice before changing the terms of the credit card account. Card issuers are also prohibited from raising interest rates in the first year and late fees are capped at $25 per violation.
BoA’s new $59 fee seems to be aimed at “less than prime” card holders. According to a report released by CardHub.com, banks may be singling out subprime customers with harsher terms and higher fees because the new regulations have made that group less profitable for card issuers.
Attorney Andrew Garcia, your SouthCoast Business Attorney, is a principal of Phillips Garcia Law. Locally he has appeared live on WBSM-AM radio and nationally on NBC’s Today Show and Fox’s Fox & Friends program. If you are interested in learning more about his Business Legal Planning services, just contact him at email@example.com or by calling (508) 998-0800.