What the $&^% is in the Water Cooler at Bank of America?

Okay – these guys are nuts. If you have a Bank of America credit card, you might have been unlucky enough to recently receive a mailing that tells you they’re about to raise your interest rate by an exorbitant amount (some cases more than double!)

First off, they’re a FORMER business partner of mine, and I think I can say they’re nuts especially since my identity remains rather anonymous. I could tell you stories, but I won’t. Instead, I’ll tell you if you got one of these mailings, don’t worry – it’s not because of anything you did or didn’t do (like not pay a bill). It's based on some secretive level of targeting that no one outside of the corporate walls understands.

They did this ballsy move because they told you they could, and you gave them your permission by way of accepting the terms and conditions that you unknowingly agreed to when you decided not to read your terms and conditions. The language you missed went something like this:

As required by law, rates, fees, and other costs of this credit card offer are disclosed here. All account terms are governed by the Credit Card Agreement. Account and Agreement terms are not guaranteed for any period of time; all terms, including the APRs and fees, may change in accordance with the Agreement and applicable law. We may change them based on information in your credit report, market conditions, business strategies, or for any reason.

This paragraph can be found at the very top of the terms and conditions, in itsy-bitsy type right above the interest rate section. The first part that bothers me is the part that says terms are not guaranteed for any period of time. But also note the last sentence, “We may change them (i.e APRs) based on information in your credit report, market conditions, business strategies, or for any reason“. Does anyone else find the last four words as haunting as I do? or for ANY reason? I can imagine the conference room at Bank of America now…

“Well, the kids have been hitting the lollipops a little too hard at our branches and it’s been hurting our bottom line. Jack, what do you think we should do about it?” “Well, Jim, why don’t we just double all of our cardholders interest rates? That should just about cover it!”

In all seriousness, there’s a lot of speculation about why they pulled such a stunt – they’ve got to level out their reserves after the sub-prime mess, they’re fattening up for their purchase of Countrywide, they’re trying to dump their dead-weight cardholders they inherited when they purchased MBNA (Mothers Brothers Newphews Aunts – a story for another day).

Whatever the reason, Bank of America is not only going to lose a lot of credibility in the marketplace. They’re likely to lose their shirts too when consumers catch on and plan a mass exodus when some other card company positions themselves as the savior by coming out with some offer that implies “Did Bank of America take advantage of you like a cheap whore at a bachelor party? How dare they. We’ll never do that to you. Sign on the dotted line and we’ll guarantee your low fixed rate for life”.

If you’re a victim of Bank of America’s seedy practices, I encourage you to visit our friends at Indexcreditcards.com where you can choose between 1,217 different cards to suit your needs. Choose carefully though – 26 are listed as Bank of America cards, and there’s a bunch more that are former MBNA cards. The good news is, there’s plenty more than one fish in the Cardfish sea. Finding what you need is like, well, shooting fish in a barrel.

CardTuna

Late payments will imprison or impose capital punishment on your rewards

You already know all the good reasons to pay your credit card bills on time, like maintaining or improving your credit score, avoiding ridiculous rate hikes and late fees, not to mention steering clear of unwanted notices and embarrassing phone calls from collection agencies. But there’s another reason you want to pay your bill on time, and that’s the access to your rewards you’ve earned.

Typically, credit card companies will not only restrict use of your card when your account is in past-due status (which prevents you from earning rewards points, let alone access to your credit line). In addition, your issuer will likely prevent you from redeeming the rewards you’ve already earned!

This ruling is often revealed in your card’s terms and conditions or program disclosures with language like the following examples:

Bank of America’s Worldpoints language: “To participate in the Program, you must (a) maintain a Card that is open and has charging privileges, and (b) be an individual (no corporations, partnerships, or other entities)”

Capital One’s language: “Your account must be open and in good standing in order to redeem, which means it isn't past due, overlimit, fraudulent, restricted, part of a consumer credit counseling program or in a bankruptcy settlement”

Citibank’s language: “To be eligible to earn and redeem [rewards], your [card type] account must be open and current and must not be in default. Citibank may revise or terminate the [card type] [Reward] Program at any time with 30 days prior written notice”

Even though these are your rewards that you’ve rightfully earned over months and years of using their product and paying your bill on time, issuers will invariably lock-up 100% of your rewards bank while your account is in past due status.

Here’s another sneaky catch to watch out for: Some card companies, like Capital One, will even revoke the points you earned in the billing cycle where you made a late payment! Their terms and conditions language is: “If a late fee is charged to your account, you will lose any miles applied to your rewards balance during the billing cycle containing the fee”. So, say you have a big charge like a $2,000 car repair that you throw on your card. Then you pay late that month – all of the points you earned on that charge, and all other charges in the month – they take away from you!

The moral of the story is, if you’re racking up points at a good clip or you’re planning to cash-in your rewards any time soon, make sure you keep your account in good standing (you should be doing this anyway)!

Note that there ARE a few exceptions to this rule. For programs like airline mile and hotel credit cards whereby points accumulated on a monthly basis are subsequently deposited into your airline or hotel loyalty program account, you will be able to access these rewards because they no longer reside with your credit card company.

Unfortunately, and by design, the credit card companies’ Terms & Conditions legal disclosures are less interesting than watching paint dry or grass grow. The reason the language is usually printed in gray 4 point type and includes paragraphs with no less than scores of lines bunched together is because they don’t really want you to read it, but the law says they have to provide those rules to you when you apply for a card.

To understand the various rules of your different credit cards or the cards you’ll apply for in the future, you need to familiarize yourself with this very important language. Hopefully someday, for everyone’s sake, we’ll all have a resource that can provide the “Cliff’s notes” versions in simple, plain English!

Until then, consider your T&C’s a great cure for insomnia.

CardTuna

Watch Your Point Values When You Redeem

Do you have a rewards points program with your credit card, maybe something like WorldPoints?

Well, here's a couple of hints to help you burn off all those points you accumulated while burning up your credit lines.

1. Check your points online periodically.  Check your paper statement against the point totals online.  You want to make sure you've been credited properly for all the points you've earned.  You also want to make sure you don't have any points that are going to expire shortly--it'd be a shame to let all that hard work spending to earn the points go to waste!
2. Check the rewards periodically.  The assortment and point totals necessary to redeem for a certain gift might change from time to time.  You might suddenly see a new reward show up, perhaps something you've been considering buying with cash, that you may want to jump on.  You might also see a "good deal" for the points appear.
3. Consider your points from a POV of personal value.  Let's face it, the redemption prices of the products you have access to are going to be lousy.  (After all, the credit card companies have to minimize the costs associated with the points programs!)  So don't worry too much about what's the best dollar value "deal."  Rather, look for items that provide you with a surprise or delight.  Something that feels like a splurge or luxury, yet has a high level of utility to you.

I recently decided to cash in about 36,000 points from BofA's WorldPoints program, as I'd stopped using the card and figured I'd better use the points before I forgot about them.  I found a great "surprise and delight" product on the site in the form of a Phillips surround sound system with DVD player.  It probably doesn't have a huge price tag associated with it.  But it actually works just fine for my bedroom TV, was something that I've avoided paying $200 for over the last 9 years and--this is the key--made me feel great when I was watching the most recent Die Hard DVD the other night.  I loved the feeling of having surround sound while sitting in my bed! 

Now, do I normally advocate points programs?  Nope.  All my new cards provide benefits back to me in the form of cold, hard cash.  But, if you've got a product rewards program, take a few minutes to get the best of those points.  (Before you convert to a cash rewards program!)

Anybody else out there get a cool product from their rewards program?