Does the soon-to-be-implemented $59 membership fee by Bank of America (NYSE:BAC) break the rules connected to the Credit CARD Act of 2009. Some thing so, and believe it could be considered a negative on the performance of the giant bank.
"In addition to increasing transparency throughout the credit card industry and instituting myriad consumer protections, the Credit CARD Act of 2009 has made sophisticated underwriting techniques increasingly important to credit card companies' success. While many issuers have both recognized this necessity and adapted to the new system, it appears that Bank of America (BAC), with its soon-to-be-implemented $59 membership fee increase, has not adjusted. The announcement of this fee -- which will be assessed to about 5% of the company’s credit card customers -- not only represents a breach of the CARD Act’s intent but also signals a need for strategic organizational changes if Bank of America is to truly compete with the country’s most sophisticated, compliant credit card issuers," said Minyanville.
They added, "Prior to the CARD Act’s passage, credit card companies were able to use various re-pricing tactics and penalty fees to cover up and support their flawed underwriting techniques. Now, however, these deceptive practices have been outlawed, widening the already-existing gap between the most advanced credit card companies, like Capital One (NYSE:COF), and the likes of Bank of America. Capital One was the most financially successful credit card company in the worst year of the recession, 2009, while Bank of America was the worst, with $5.56 billion in losses stemming from its credit card operations."
"As a result, anyone invested in Bank of America or like-minded credit card issuers has reason to worry. If these companies do not soon change course, they will lose market share and face an increasingly uphill battle in trying to compete with their peers. Regulators are prepared to protect the new-and-improved credit card landscape and banks that are unwilling or unable to adapt will struggle," the writer concluded.
Source
Thursday, March 10, 2011
Bank of America (BAC) Breaking Credit Card Act?
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5 comments:
Proof read your work. Otherwise some will "thing" nothing of what you post.
Yeah - I agree with that - but what he had to say, once filling in the blanks, was insightful. (And I had to try 3 times before getting that word right...) ;-0
Sorry, Ellen - She! ;-)
I have two BOFA credit cards and none of them charge annual fees. I am not sure how credible this information is. If you don't want to pay for the service, don't use BOFA's credit cards. Say thanks to the Dod/Frank act which makes it extremely difficult for banks to cover the cost of providing credit services for customers.
This is ignorance... CARD Act doesn't state that you're not allowed to start charging a fee on an account that started without one. This is what it does say:
Your credit card company must send you a notice 45 days before they can change certain fees (such as annual fees, cash advance fees, and late fees) that apply to your account.
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