Bank of America: The Nice Guys?

Bank of America: The Nice Guys?

The results are in, and according to numerous studies, we’re pissed about our credit cards. We’ve had our credit limits slashed, our rewards cut back, our interest rates hiked and our coffers raided by fees, fees and more fees. Some vindication came in the form of the Credit CARD Act, but for the most part, we’ve just seen old dogs learning new tricks and still making a buck off consumers. And we’ve all been plenty vocal about our disgruntlement. According to a recent Consumer Reports poll:

* 21% of cardholders claim they were treated unfairly by lenders
* 45% reported that they were using their credit cards less
* 33% of those polled have closed an account since January 2008

In addition, 54% of customers reported that they now pay their balances off in full, likely to avoid being charged ever increasing fees. So, what’s the result of all this ire? Surprisingly, and perhaps smartly, Bank of America has been equally as forthcoming about the issues surrounding customer satisfaction. In fact, on Monday, Bank of America wrote a letter to Barney Frank, chairman of the U.S. House Financial Services, promising that they’ll play fair with customers in the years to come. Here’s what the letter says:

In light of the concerns expressed to us by our customers, Bank of America 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. We believe that this is the responsive to the concerns we have heard and is consistent with other consumer oriented policy changes we have made recently, like giving customers much more control over the risk of incurring overdraft fees and substantially limiting the application of those fees.

Those “changes in terms” and “re-pricing of consumer credit accounts” that Bank of America claims they won’t be partaking in refer to the backlash from the first wave of CARD Act. To compensate for the upcoming restrictions, many card companies began switching cardholders to variable rates, adding new fees (foreign transaction fees, inactivity fees, etc.) and otherwise altering credit card terms. We also saw debit cards step up their game by ruthlessly levying overdraft fees and allegedly rearranging transactions so consumers would incur more penalties. All of this put a sheen of mistrust on relations between consumers and their banks.

Give it to Me Straight

In addition to the letter of good faith sent to U.S. lawmakers, Bank of America also earlier made an effort to show their dedication towards transparency. This October, Bank of America plans to roll out the Basic Visa, a card that is marketed as a no-nonsense, straightforward card with no tricks or traps. Again citing the will of the people, Bank of America said this in their press release:

In response to consumer demand for a card that offers the convenience of credit with simplified rates and terms, Bank of America is introducing the BankAmericard® Basic™ Visa® card. The new card features one basic rate for all types of transactions, including balance transfers and cash advances. That rate, which is tied to the U.S. Prime Rate, will not change over the life of the account.

Of course, a variable rate tied to the prime rate will actually end up being mighty lofty when (or if) the economy gets back on its feet. But at least they are being up front about how your interest rate gets figured.

The odd thing, though, is that the Fairness in Lending Act already requires credit card companies to disclose interest rates, though this is also done in asterisk form, in tiny print a page and a half below the prominently displayed introductory rate.

Overdraft Overhaul

As mentioned in the more recent letter, BofA also took measures to redress its overdraft policies, again, citing the bad PR that all banks have gotten lately. Starting October 19, Bank of America:

* Will not charge for overdrafts less than $10 per day (as opposed to charging for overdrafts above $5)
* Will not charge more than 4 overdrafts per day (formerly 10)
* Will allow customers to opt out of overdraft protection

All of these measures are very nice of Bank of America. But it seems a bit dubious to remove a dastardly practice and spin it as a brand new benefit for customers (”Blankets – now without small pox!”). It almost feels like too little too late.