BOA= Bad for America

Anonymous · ‎02-08-2008

http://articles.moneycentral.msn.com/Banking/CreditCardSmarts/IsBankofAmericaBlindsidingCardholders.aspx

Vu · ‎02-08-2008

Not as bad as allowing illegal immigrants apply for credit card... I've cancelled my checking account, and Visa card with them. I rather pay $450 annual fee to Amex than to BoA.

The idea of high utilization = higher interest rate is very ridiculous. When the card is approved, the credit limit and interest rate are set and it is literally means: With your credit score (risk), we (BoA) think we are safe to allow you to charge up to (the limit). Why the heck all sudden months later (without any changes in credit score) the card holder is more risk?

Message Edited by Vu on 02-08-2008 04:16 PM

Anonymous · ‎02-08-2008

Vu wrote:
Not as bad as allowing illegal immigrants apply for credit card... I've cancelled my checking account, and Visa card with them. I rather pay $450 annual fee to Amex than to BoA.

The idea of high utilization = higher interest rate is very ridiculous. When the card is approved, the credit limit and interest rate are set and it is literally means: With your credit score (risk), we (BoA) think we are safe to allow you to charge up to (the limit). Why the heck all sudden months later (without any changes in credit score) the card holder is more risk?

Message Edited by Vu on 02-08-2008 04:16 PM

That made sense before FICO. Computer modeling deals with risk at the population level, not very good for individuals.

Anonymous · ‎02-08-2008

Vu wrote:
Not as bad as allowing illegal immigrants apply for credit card... I've cancelled my checking account, and Visa card with them. I rather pay $450 annual fee to Amex than to BoA.

The idea of high utilization = higher interest rate is very ridiculous. When the card is approved, the credit limit and interest rate are set and it is literally means: With your credit score (risk), we (BoA) think we are safe to allow you to charge up to (the limit). Why the heck all sudden months later (without any changes in credit score) the card holder is more risk?

BofA doesn't know a cardholder's financial situation at any given moment. Some of their cardholders have plenty of resources available to them, and some are struggling to pay their bills.

Given the above, those cardholders who actually use a large percentage of the credit available to them for an extended period of time are more likely to be in the group of those who are struggling than those who use very little of their available credit. That's why higher utilization = higher risk = higher APR.

Also, take out the risk equation for a moment and look at it strictly from the standpoint of profitability. A cardholder who carries large utilization from month to month appears to be having difficulty paying it off. In that case, the bank maximizes profit by charging the "captive" customer more than the one who can easily PIF and take their business elsewhere.

Vu · ‎02-08-2008

When bank issue credit card, bank do not know the customer's financial situation beside income on application and credit report. If bank want to know now, they can request the same thing. When the credit score have not change = very likely the financial situation stays the same as before. Unless the customer charged up all of his/her cards, then it is very likely the score will drop significantly. All of the complaints in the article mentions no drop in credit score. High utilization + pay minimum only = increase APR = somewhat understandable. Moderate utilization + pay more than minimum (to take advantage of low ARP B/T) = Increase APR = Greedy = story I read from the article. I wish more people take their business elsewhere when BoA willing to allow illegal immigrants apply for credit card just so they can make more money. This is the exact type of company that willing to do anything to improve its bottom line, and do its part in encourage more illegal immigrants to come here.

Anonymous · ‎02-08-2008

Vu wrote:
Moderate utilization + pay more than minimum (to take advantage of low ARP B/T) = Increase APR = Greedy = story I read from the article.

I don't know how you got that from the article. The two cardholders featured in the story do not fit the description you just posted.

First person: Took 6 months to pay $700 on a $3700 debt. In the end was still at 54% utilization.

Second person: Was carrying $7500 balance on $8000 CL. That's 94% utilization.

Where do you see "moderate utilization" here?

If there are people who fit that description and have experienced a BofA ratejack, the author sure didn't go to any trouble to find any.

Anonymous · ‎02-09-2008

@Anonymous wrote:

Second person: Was carrying $7500 balance on $8000 CL. That's 94% utilization.
Where do you see "moderate utilization" here?
If there are people who fit that description and have experienced a BofA ratejack, the author sure didn't go to any trouble to find any.

I read that differently. Her CL was increased 3 months ago from $5K to $8K for a strong payment history.

"After paying tuition for a community college course, transferring another balance and paying for daily expenses, Pennington's Bank of America debt now stands at $7,500."

We don't know how much of a balance she was carrying or if she was carrying a balance on that account when it was increased. So although her util went very high in a short period of time, has there been enough time passed to see how she pays it down?

Shrug, I just took one account to 92% util to take advantage of a 2 yr promo BT offer. Even got a $1.5K CLI at the time of BT (done over phone). According to the author's example, this account should then be deemed high risk and rate jacked. I think this may be what Vu was trying to get across, why offer promo BT and a CLI if they'll take AA if they're used? Although, the article doesn't mention taking advantage of offers, especially when the offers can present good financial sense for an individual.

Anonymous · ‎02-09-2008

PenguinGeek wrote:

I read that differently. Her CL was increased 3 months ago from $5K to $8K for a strong payment history.

"After paying tuition for a community college course, transferring another balance and paying for daily expenses, Pennington's Bank of America debt now stands at $7,500."

We don't know how much of a balance she was carrying or if she was carrying a balance on that account when it was increased. So although her util went very high in a short period of time, has there been enough time passed to see how she pays it down?

Agreed, the article is ambiguous on the timing of the RJ in comparison to the charges mentioned, so we don't actually know what her balance was at the time of the RJ.

If we assume, though, that she was not carrying that balance when she was RJ'd, then that means she made the decision to transfer a balance (remember, part of her $7500 balance is a BT) onto a card where she'd just been RJ'd, and she's also using that RJ'd card to pay for "daily expenses."

I think it's more likely that she was already carrying that balance, or at least a part of it.

Anonymous · ‎02-09-2008

@Vu wrote:
Not as bad as allowing illegal immigrants apply for credit card... I've cancelled my checking account, and Visa card with them. I rather pay $450 annual fee to Amex than to BoA.

The idea of high utilization = higher interest rate is very ridiculous. When the card is approved, the credit limit and interest rate are set and it is literally means: With your credit score (risk), we (BoA) think we are safe to allow you to charge up to (the limit). Why the heck all sudden months later (without any changes in credit score) the card holder is more risk?

Message Edited by Vu on 02-08-2008 04:16 PM

Correct me if I am wrong , but can't anyone apply anywhere? If so, that does not mean that they will get approved.

Anonymous · ‎02-09-2008

Vu wrote:

The idea of high utilization = higher interest rate is very ridiculous. When the card is approved, the credit limit and interest rate are set and it is literally means: With your credit score (risk), we (BoA) think we are safe to allow you to charge up to (the limit). Why the heck all sudden months later (without any changes in credit score) the card holder is more risk?

Message Edited by Vu on 02-08-2008 04:16 PM

This doesn't take into consideration the risk associated with time. There is a greater risk of default in a person who carries a large balance for a long time, as opposed to a person who carries a high balance for a short time. The higher APR is used to buffer that risk.