Still in Chains

I received an interesting letter today from Bank of America (you know, the people who take mortgages from undocumented workers). The letter announced some "enhancements" to their system.

On or after January 19, 2008, the APR for Cash Advances (which includes using an ATM with their card) will go to 26.24%. This is also expressed as a Daily Periodic Rate (DPR) because they compound the interest every day.

Also on the same date, a new term, "default re-pricing event" becomes part of the card agreement. A "default re-pricing event" occurs (1) if the minimum payment is late, or (2) if the outstanding balance exceeds the credit limit during the billing cycle. Two such "default re-pricing events" in a 12 month period will result in a default APR of 32.24% being applied to the account.

Third, effective March 10, 2008, any Balance Transfer, Check Cash Advance, or Direct Deposit Cash Advance will have a Balance Transfer Fee of 3% with a minimum fee of $10. It appears from the letter that the maximum fee of $75 will no longer apply. They aren't really clear on that one.

Fourth, the letter formally announces that interest on the balance will be compounded daily.

Finally, effective November 30, 2007, the arbitration section of the agreement is amended. Either party may choose to arbitrate a claim, and if arbitration is chosen, the decision to arbitrate shall cover "any third party providing benefits, services, or products in connection with the account"; in other words, if you were provided with a faulty product that caused injury, Bank of America can choose to arbitrate any damage claim and [their bold and caps] "...PRECLUDES YOU AND US FROM HAVING A RIGHT OR OPPORTUNITY TO LITIGATE CLAIMS THROUGH COURT, OR TO PARTICIPATE OR BE REPRESENTED IN LITIGATION FILED IN COURT BY OTHERS." So if somebody else sues, and you had a similar experience, you are forbidden to testify in court for them if your own claim has been arbitrated.

Personally, I think the people at Bank of America are totally un-American. Consider this : the borrower who has two "default re-pricing events" within a 12 month period is probably already in financial difficulty. The bank would be much further ahead if the credit were halted, the interest rate rolled back to a level where the borrower could pay, and as much of the principal as possible recovered. They certainly are not listening to Ben Bernanke. Raising the interest rate on a financially troubled borrower to 32.24% is asinine.

It is time to cancel this card.

The Bible states that the borrower is the slave of the lender. The biggest slave-owners in America today are the credit card companies.