Bank of America is Changing Terms on Their Cards: Fixed APR Become Variable APR

I just received letters notifying me of changing terms on two of my BofA cards. Both said the previously fixed APRs will become variable, tied to the prime rate at May 31, taken as 3.25%. The standard rate will be added. Quote:Prior to this amendment, the non-promotional APR for (Balance Transfers, Cash Advance, Purchase) balances was not a variable APR.
Example:
Current index: 3.25%
- Standard rate for BT: 6.65%. Resulting: variable APR of 9.90%
- Standard rate for CA: 21.74%. Resulting: variable APR of 24.99%
- Standard rate for purchases: 6.65%. Resulting: variable APR of 9.90%.

It looks like BofA wants to change their terms preventing a cash hemorrhage characteristic to an inflationary environment. Or they may just want to take the advantage of the historically-low prime rate and monetize from it, especially given the future changes in the credit card legislation.

If this is not just my experience, then it means don't use any BofA cards if you don't pay it in full, beyond their promo period!

g10ny said: It looks like BofA wants to change their terms preventing a cash hemorrhage characteristic to an inflationary environment. Or they may just want to take the advantage of the historically-low prime rate and monetize from it, especially given the future changes in the credit card legislation.

I think they just want to make more money.

staci86 said: BoA changed my fixed rate to a variable rate based on prime. The nominal rate was unchanged.

This is a direct response to the recent credit card legislation, given that worries of inflation are very real.
There are two main points here:
1. The shift from fixed rate to variable rate. If this will apply to all its cards (and if other issuers follow suit), it will change significantly the credit card environment.
2. BofA chose to do this when the prime rate is at its lowest point. Even if inflation does not turn into hyper-inflation, it's easy to look back and see what would have happened during the previous cycle (2001-2008) if only variable rates would have been in effect, to see what the next cycle would be for people who carry balances when prime rate increases.

yup i got it on my ML+ FIA too and a quantum bofa

I received the same note and have placed a call to not accept the changes, close the account, and pay off the balance under the original fixed rate contract. All of the folks I talked to, and I have been on the phone for an hour said that I am not able to opt out of the amendment because the variable rate is no different than the current fixed rate. I tried to indicate that it was a change in terms that will result in future increases and they indicated that I don't know that. Are they kidding! How can they change the terns of an account and not allow the account holder to not accept the changes and close the account pursuant to the current agreement. This is wrong and it seems like a real semantic difference that indicates it is an amendment and not a change in the rate.

blarp said: I received the same note and have placed a call to not accept the changes, close the account, and pay off the balance under the original fixed rate contract. All of the folks I talked to, and I have been on the phone for an hour said that I am not able to opt out of the amendment because the variable rate is no different than the current fixed rate. I tried to indicate that it was a change in terms that will result in future increases and they indicated that I don't know that. Are they kidding! How can they change the terns of an account and not allow the account holder to not accept the changes and close the account pursuant to the current agreement. This is wrong and it seems like a real semantic difference that indicates it is an amendment and not a change in the rate.Why are you even on the phone?

You need to write a letter rejecting the change

Doesn't the letter state what to do in case you reject the changes? I received the same letter a few months ago making my BOA card go from 7.9% fixed to something like 15%. It listed a number to call if you reject the changes.

I called and it took all of 1 minute to go through the automated prompts.

WalStMonky said: g10ny said: If this is not just my experience, then it means don't use any BofA cards if you don't pay it in full, beyond their promo period!

Yes, god forbid anyone should use variable rate financing for anything!
In the true FW spirit, that is.

blarp said: I received the same note and have placed a call to not accept the changes, close the account, and pay off the balance under the original fixed rate contract. All of the folks I talked to, and I have been on the phone for an hour said that I am not able to opt out of the amendment because the variable rate is no different than the current fixed rate. I tried to indicate that it was a change in terms that will result in future increases and they indicated that I don't know that. Are they kidding! How can they change the terns of an account and not allow the account holder to not accept the changes and close the account pursuant to the current agreement. This is wrong and it seems like a real semantic difference that indicates it is an amendment and not a change in the rate.

I just got that letter too. Here is what happened when I called the number on my card...

The person I talked to said it was the "risk department" that changed my interest rate to a variable rate. I don't know why that would be since I haven't been late. So they transferred me to that department... which didn't exist. I got disconnected.
So I called back...
This time it was a different person. He said that my APR can't go any higher than it is right now even though it is a variable rate. I called him out on that.
I said, where does it say that in the letter that there is a limit on my rate?
He said, it doesn't say that.
So I said, so you are telling me that I have a variable rate that will not go up? He said, you are already as high as it will go.
I said, how do I know that if it isn't in the letter? He said, because that is what I am telling you.
I said, if it doesn't say it in the letter I ain't buying it.
He said, well what do you want me to do?
I said...
CANCEL THE DAMN THING AND LEAVE MY RATE ALONE.
He said Ok.

In the letter, it specifically stated "An increase in the index means that you will pay higher periodic rate finance charges and have a higher Total Minimum Payment Due". It also says, "If the Wall Street Journal does not publish the U.S. Prime Rate, or if it changes the definition of the U.S. Prime Rate, we may, in our sole discretion, substitute another index".
SCREW ALL THAT!!!

I HATE BofA. Always have. My credit card account was originally with someone else but BofA purchased it.
I should have cancelled it years ago.
I have a large balance on the card and am going to pay it off ASAP so that they do not get any more interest from me.

WATCH YOUR ASSETS!!!
Run. Run Fast. Run FAR.

FuzzyWombat said: I usually don't think of carrying a balance on a credit card as an asset... but ok.

No... but they will eat away at your assets.

umm, question here because I got the same letter (variable rate) and there was no "opt out' option as I've seen with other rate increases. They are nuts because I don't really see that index going DOWN further, only up. Did they allow you to close the account at the fixed rate APR?

Ijust got my letter, and called...they said I couldn't opt out because it's going to be a variable rate...which doesn't make any sense to me. This is BS. I then told her to close my account because I thought that would prevent my rate from changing...apparently according to her it doesn't. It would still change to a variable rate. I then freaked out on her because she already closed my account and said she couldn't reopen it until her computer system updated...which was total BS. She put me on hold to "research" and came back on and said she fixed it...but my card will still be changing to variable rate which I can't opt out of. This can't be right, I thought if you canceled your account, they can't touch you...am I wrong?

MY RANKING OF THE FAIREST BANKS TO THE WORSE:

JUNIPER (Barclays) (plays fair)
CITI BANK (plays fair)
CAPITAL ONE (unfair)

the following are all bad, but from bad to worse:
BOA
CHASE
HOUSEHOLD Bank

You can do what i did, before i got the letter. I went to the bank and took out $15,000, my apartment is now awash in cash, and i love it.....A

I received the same letter earlier this week on my Bank of America Signature Visa. My fixed 9.9% is changing to a variable 9.9% tied to prime (which is currently at 3.25%--the lowest point since the 1950s). I do not have a balance on the card so I can just close the account, but I did notice there is no opt-out notice anywhere on the three pages they sent me.

The lowest rate BofA currently shows on its application for the same card is 11.99% variable so I guess they are trying to upset their good customers as little as possible by not immediately raising their rate. However, with the prime rate as low as it is now, the rate has nowhere to go from here but up.

BOA did the same to my wife. The card HAD a 5.9% fixed purchase and cash advance rate. It is still 5.9% as of right now, but it has been switched to a variable rate so it WILL increase soon. Jerks!

Received my letter this week. Havent used the card since 2001 so it could have been worse.

Crazytree said: got my notices for my BofA cards and my Fidelity/FIA cards in the same week.

When you say FIA, are you referring to a special Fidelity card? Or are you referring to FIA, the company that helps administer credit card accounts for the majority of the banks out there? At least I think that's what FIA does, I'd be interested in anybody sharing insight into what FIA does as I often see them mentioned in the fine print of various credit card offers.

As for the reason, this lets BofA rid themselves of customers so that they can show more unused credit along with protecting them if (definitely when) rates go back up. AMEX went about this in a different way by offering $300 to "unwanted" customers to close their accounts. At least this way, BofA doesn't have to pay you to get you to pay-off your balance and close your accounts.

I have two cards with them (they sure bought lots of companies) and you bet I'm not going to close them even though I have them paid-off. I will be complaining and I encourage anyone this affects to do the same.

SUCKISSTAPLES said: blarp said: I received the same note and have placed a call to not accept the changes, close the account, and pay off the balance under the original fixed rate contract. All of the folks I talked to, and I have been on the phone for an hour said that I am not able to opt out of the amendment because the variable rate is no different than the current fixed rate. I tried to indicate that it was a change in terms that will result in future increases and they indicated that I don't know that. Are they kidding! How can they change the terns of an account and not allow the account holder to not accept the changes and close the account pursuant to the current agreement. This is wrong and it seems like a real semantic difference that indicates it is an amendment and not a change in the rate.Why are you even on the phone?

You need to write a letter rejecting the change

Would a letter requesting "No Change" to terms and close the acct work in this case? She told me BoA is changing all CC across the board to Var and no more Fixed cards and closing the acct wasn't going to keep it at current fixed rate. BS? I am expecing the rates to rise and would like to keep the fixed rate even if it means closing the acct. But don't want to close it if the rate will become var even on a closed acct.