Bank of America not to hike fees, interest on credit cards

Call it a policy of appeasement, a move to quell anger amongst customers, or a fire-fighting measure, Bank of America Corp (NYSE: BAC) has declared that it will not alter the fees and interest rates levied on consumer credit cards. Bank of America bucks the trend at a time when all credit card issuing banks are hiking interest rates. BoA has pledged to keep them unchanged till the Credit CARD Act is implemented. The lawmakers have urged the other banks to follow suit

The charges would not be hiked till the time the new federal regulations take effect next year, claimed the largest bank in the United States.

North Carolina-based Bank of America, which is the second-biggest credit card lender after JPMorgan, announced that it "will not implement any change in terms (risk or economic based) re-pricing of consumer credit card accounts between now and the effective date of the CARD Act."

Customer-oriented move
The decision has been taken in wake of the concerns raised by the customers. "We believe that this is responsive to the concerns we have heard and is consistent with other consumer-oriented policy changes we have made recently," said Collingwood.

Bank of America's proclamation comes after many of the credit card issuing banks increased the interest-rates and fees in recent times.

Majority of the new law's provisions, such as limiting banks from raising charges, increasing fees on existing balances and other controversial practices, are scheduled to come into effect in February.

The hikes by the banks on an immediate basis thus made commercial sense; however, these upward revisions of the fees have been condemned by the customers and regulators alike.

Credit CARD Act
The Credit Card Accountability Responsibility and Disclosure Act of 2009, popularly known as Credit CARD Act of 2009, is a federal law passed by the Congress in the United States.

The U.S. President Barack Obama signed it on May 22, 2009, and it will come into effect in February 2010.

Upon signing the bill, President Obama had said, "With this new law, consumers will have the strong and reliable protections they deserve."

The objective of this comprehensive credit card reform legislation is "to establish fair and transparent practices relating to the extension of credit under an open end consumer credit plan, and for other purposes."

Among other provisions, the Credit CARD Act restricts the banks from arbitrarily raising the interest rates. It requires the card issuing banks to give cardholders 45-days notice of any interest rate increases.

The Act also prohibits card companies from charging interest on debt that is paid on time during the grace period. This clause essentially puts a stop to the so-called "double-cycle billing" practice.

The Credit CARD Act also requires the card companies to mail the billing statements 21 calendar days before the due date instead of the present mandate of 14 days. The act also contains new protections for college students and young adults.