Apparently the fee does not apply to ATM withdrawals. A single purchase will  trigger the $5 fee for that month.

Consumers agree that they do not like the fees. However, the fees are not so unsavory that they are planning to leave Bank of America.

Instead, we are seeing another trend. Many customers including this author are making the switch to an alternate account with another institution.

If Bank of America does not waive my fee on a monthly basis, then I will simply stop using it for debit transactions. My credit union does not assess any fees, which makes it a perfect switch.

Another expected trend is one that Bank of America and others are definitely in favor of. They believe that customers will begin using their Bank of America credit cards instead of their debit cards. This benefits the bank, since this opens the door to finance charges that were not possible when customers depended on their debit cards.

For more information about the new fees, Debtors Unite is keeping up with the developments on the $5 monthly debit card fee at Bank of America. They are also following the regulatory unrest over the fees which Senator Durbin is personally monitoring.

This removes one potential source of confusion that likely led to overdrafts from customers who thought their account balance was as high as what was posted in “Account Activity.” Now all transactions appear on that page.

Prior to May 2010, Bank of America would omit any pending or completed scheduled bill payments for the current day from the “Account Activity” listings. This resulted in an overstated account balance.

As anyone knows, when your actual account balance is lower than what you believe it is, you run a higher risk of over-drafting your account. Such a discrepancy in account balances has likely resulted in millions of dollars in overdraft fees over the years.

This change to Bank of America’s online account management console aids transparency and improves accuracy of account information. A better informed customer is better able to plan future payments and ensure they will have enough money in their account.

While Bank of America has finally embraced full transparency of their online banking, other major financial institutions have not. Since regulatory interference is unlikely, it will be up to the competitive market to put pressure on those banks that still do not provide a true balance to their customer.

Indeed, the entire Bank of America online banking experience is much improved. Users now have direct access to all linked accounts, including checking, savings, money market, credit cards and even investment accounts through Banc of America. Having access to all accounts facilitates payments and moving money around. It still takes a day to transfer funds from checking to investment banking, but I imagine this barrier will soon fall as well.

What Was Amiss?

Specifically, I noticed that my credit card balance had increased from a $-17.53 to $46.47. Curiously, I wondered what was that $64 charge?

As a matter of habit, I routinely review all of my transactions to ensure that no fraudulent activity has occurred. A review of the account activity as well as the actual statements showed no transactions, yet the balance mysteriously showed that something had been charged.

The Culprit

My interaction with a Bank of America text chat specialist revealed the answer. This was her response:

please do not check the online banking balance as it is in correct.

The online banking is under maintenance and hence your are not able to see correct information.

Due to new card act that has been introduced, there will be a user friendly site for the customers to use it more efficiently due to that online banking is changing and there are lot of changes made I request you to do check it after 24 hours as we updating it as per the new card act from the federal government.

What she was referring to is the Credit CARD Act of 2009 that places new restrictions on financial institutions. It is expected to make usage of credit cards a bit less of a debt trap.

I was able to view the charge a few hours later. I will be sure to sign into my online account in a couple of days to see how they have changed the online experience. Hopefully it will make things even better.

Credit card companies have begun raising interest rates and making other changes to accounts in order to increase revenues and reduce default risks. The problem is that some actions may have actually increased default risks. Here are the changes that some major card issuers have made in 2008:

• American Express changed terms of their credit card accounts to increase interest rates on purchases and fees for late payments. Foreign transaction fees have increased, but they are still less than what others charge.
• Bank of America has raised interest rates on many of their card accounts. Also, many cardholders have recently had credit limits lowered. My limit was recently raised, so any reduction in your credit limit is apparently a result of periodic account review inquiries that suggest financial weakness.
• Capital One changed their minimum payment calculation. This could result in some cardholders experiencing an increase in their minimum payments.
• Chase has implemented substantial minimum payment increases from 2% of the balance to 5% of the balance. Additionally, a $10 fee has been added to many accounts. These changes do not apply to all accounts. Most cardholders that experienced the changes had taken advantage of a low-interest balance transfer offer at least 2 years ago. Affected cardholders could see their minimum payments increase 150%. For example, a $10,000 balance would require a minimum payment increase from $200 to $500 a month.
• Citibank has raised its purchases interest rate and has increased the penalty rate charged to late payers. In addition, Citi’s Sears cardholders may no longer have extra payments applied toward the following month’s minimum payment.
• Discover had only minor changes that matched what other card issuers had also done. They removed the cap from balance transfer fees.

The Treasury has declared a deadline of July 1, 2010 that all credit card issuers must comply with new regulations. These restrictions will keep card issuers from raising interest rates on existing balances for “any time or any reason.” They will also lock in interest rates on existing balances, so that any rate increases would only apply to new purchases.

Many cardholders have experienced frustration with the recent changes. Some consumers have expressed anger at changes made to existing balances that they believed were locked into a deal for the life of the balance. Other cardholders have allowed accounts to lapse because they cannot afford to make the higher payments.

Some relief is on the way to cardholders that find they cannot afford to keep up with their payments. However, the regulatory relief will not reach most of them in time to make a difference. Instead, if you are in trouble now, you should get help through credit counseling before you find yourself in a hole from which you cannot escape.

If you believe that your credit scores are still good but you have experienced adverse changes to your credit account terms, then there is a good chance that your bankruptcy risk score has changed. It could be the reason for your high-risk classification.

What is Universal Default?

Universal default is a practice of some credit card companies that increase your credit costs if they see signs of weakness on your credit report. In practice, a consumer that falls behind or goes over-the-limit on one credit card account could experience interest rate hikes and reduced credit limits on their other credit card accounts, even those issued by other creditors.

Why Did Universal Default Disappear?

Universal default was phased out by credit card companies in 2006. They did this during a period of increased Congressional scrutiny of credit card practices.

Congress debated increasing regulations imposed on credit card issuers. The major credit card companies instead tried to prove to Congress that they could police themselves, and that more regulation was unnecessary.

The major component of universal default is the “any time for any reason” right to increase rates or reduce available credit to a cardholder. Members of Congress wanted to outlaw this practice. As a result of these discussions, credit card issuers voluntarily stopped universal default practices in 2006.

Why is Universal Default Returning?

Universal default is returning to credit card agreements for two primary reasons:

1. First, credit card issuers are facing mounting losses from credit card defaults. In addition, many of these firms are also experiencing other subprime credit losses that further hammer profits. Credit card issuers are trying to stop the bleeding, and these increases in revenues should offset some losses.
2. Congress is allowing considerable latitude among financial institutions following the collapse of several commercial and investment banks. Credit card issuers are betting that Congress will allow for such practices in the interim until financial markets stabilize and begin their recovery.

Most credit card issuers are bringing back some form of pricing increases, whether specifically through universal default pricing or through across the board changes. Already, American Express, Bank of America and Citibank have begun raising rates of cardholders regardless of consumer behavior.

If you have a credit card account, you may or may not see an interest rate increase as a result of these changes. They are not necessarily affecting all card accounts by these issuers. However, if you have shown any signs of distress on one card account, you should be prepared for subsequent reactions from your other credit card issuers. Universal default will likely raise your interest rates and increase your minimum payments, possibly beyond what you can reasonably afford!

This increase is the result of a periodic account review inquiry that is done to evaluate the changes in your perceived risk of default. Account reviews are initiated by your credit card issuers in order to keep track of any changes in your credit or financial situation.

Account reviews can have a positive effect on cardholders. For example, if your credit score has gone up by 40 points, then your credit card issuer may be wiling to increase your credit limit.

Account reviews can also impact you in a difficult way. You could see your interest rates increase or receive notification that your credit limit is being lowered.

Bank of America has been increasing the interest rate on certain card accounts. It is believed that such increases are being made as a result of certain traits identified by Bank of America that could indicate a higher risk of default. Those exact triggers of a higher rate have not been disclosed.

If you are a Bank of America cardholder, there are some steps you can take to potentially avoid such increases in your interest rate. In addition to making sure you make all minimum payments on all card accounts, you may wish to focus on other factors that could indicate financial weakness. These could include:

• Barely paying the minimum payment
• Carrying high debt balances on multiple credit cards
• Approaching the credit limit on one or more credit card
• Using non-traditional lenders that specialize in subprime lending

If any of these risk factors applies to you, it does not mean that Bank of America or any other of your card issuers will raise your interest rates. However, there is an increased likelihood of experiencing rate increases if you exhibit some of these risk factors.

Other changes in Bank of America credit card policies include reducing the initial credit limit on new accounts and closing idle accounts that have zero balances.

If you have already experienced an increase in your interest rate on a Bank of America account, you have probably also noticed an increase in the monthly payment. You do have options to reduce this interest.

First, you may decline the changes and repay your balance while receiving the previous rate. You must generally do this within 30 days and you will lose the ability to use that card account.

If you have a high balance on your Bank of America account and also are having trouble with other credit cards, then you may need more substantial assistance. These are signs that you might need credit counseling. With credit counseling, it may be possible to lower your interest rates and in turn provide for lower payments on your credit cards.