Bank Of America ripoff higher interest rate no reason given Carol Stream Illinois

You won't find a reason for the increase because there likely isn't one. (Unless you count 'because they can'.)

Just a suggestion, in addition to the multitude of complaints here regarding Bank of America, try a google search and include the word 'sucks'. You'll find thousands of similar complaints and plenty of suggestions - the most important being: Change banks immediately.

This is the same genius institution who 'lost' 1.2 million credit cards of key government personnel just last week. Do you really want them handling your paycheck?

First, let me explain that your interest rate is tied to your credit score now. That's the FICO number you have probably heard about.

The idea behind fico is that it's supposed to provide an overall picture of your credit worthiness and financial stability. You can think of it as risk assessment for the people who borrow money.

Obviously, the more risk you are, the higher a company will raise your rate. That makes sense. Credit cards are in a class called unsecured debt. That means when you file for bankruptcy, they receive little or nothing. So, obviously, they want to know where you stand before they loan you any money.

They monitor your credit file to detect any changes. As your credit score goes down, your rate will go up.

Now, let's look at the true cost of credit. This is what most people don't realize.

All lenders use compound interest these days. Simple interest is all gone.

In compound interest, they have a formula know as the rule of 72s. The way that works is you take your interest rate and divide it into 72. The result is the number of years for the principle to double.

Take 18% and divide it into 72. The result is 4. That's 4 years. Any amount you borrow doubles every 4 years.

So, borrow $8,000 on a credit card. That just happens to be the average of all Americans who carry a monthly balance.

Keep that $8,000 balance for 4 years, and you pay back double, or $16,000. After 4 more years, it doubles again. That's $8,000 more.

You quickly see that when you use credit, you end up paying double or even triple for things.

Ask yourself, can you afford to do that? Buy a television for $500. Take four years to pay it off, along with all your other payments. You end up paying double.

Let's look at a home loan. It around 7%. Divide it out. The amount will double every 10 years. Traditional loans are up to 30 years now. That's triple the original amount. Actually, it's a little less, because the principle is always being paid down.

But, you quickly see that you still pay back twice what the home actually costs. This is how credit works. And, this is why one company will fight to keep you as a borrower. Every month, you're good for a couple of hundred dollars just in interest alone.

For the lender, it's all free money. That's why, when I hear someone describe themselves as having good credit, I know they are a sucker who has paid a lot of wasted interest charges to get that good credit.

There's no free lunch. Good credit costs tons of money in interest payments.

Still think paying double for everything is such a good idea? If you said yes, you must have an oil well in your back yard, or a hole in your head. One or the other.

The system is set up so that consumers have to dance with the devil of credit cards to qualify for the best rates on mortgages and car loans. I think that new cars aren't worth what they cost, especially if you have to finance them. But very few people will ever be in a position to buy a house for cash. And for those who are, a mortgage may still be a better option.

Using credit cards does not need to be a waste of money. The rule is simple. Get 2 or 3 credit cards, and:

Never buy anything with a credit card that you wouldn't have been willing and able to buy for cash.

Then you'll be able to pay off the credit card in full well before the due date. This practice is BETTER for your credit score than running up a balance and paying it off slowly. Any of the prime cards have a grace period, which means it costs NO extra money to use the card this way. No matter what the APR is, it effectively becomes zero if you pay in full on time. Some cards will even give you money back.

Now if you slip up on rule #1, rule #2 is to cover your back. Have a spare card from a different bank already approved and ready to go. If the bank raises your rate, transfer the balance to the spare card and shop for a new one. If enough people vote with their feet that way, banks may quit this nonsense. But those with a balance so high that they won't be able to pay it off in 3 or 4 months are trapped, and the banks know it. The only cure for this is prevention.