Banking http://addingunderstanding.com/taxonomy/term/137/atom/feed 2006-08-06T23:10:07-06:00 The non-fixed APR http://addingunderstanding.com/bank-of-america-deceptive-advertising.html 2007-06-04T06:00:00-06:00 2007-06-04T09:27:46-06:00 joshb Credit card companies frequently are coming up with new ways to sucker customers. The beleaguered industry is certainly not without its benefits but the methods used by many companies are outright slimy. Consider the advertisement in the mail from Bank of America. The ad for Zero Balance tells how I can get an unsecured loan of "up to $50,000* at competitive non-variable rates."

There is not even one little footnote symbol next to the "non-variable rates" portion that is highlighted in yellow for would-be borrowers. What does a non-variable rate mean? Is it the fixed rate that many would commonly think it might be? Well, no. While there is no footnote indicator there is an explanation in the fine light gray print on the back it explains:

By "non-variable rates" we mean that the APR will not automatically vary with an index, such as the Prime Rate. We reserve the right to change your APR, fees, or other credit terms at our discretion.

So it turns out that "non-variable" means they aren't tied to a somewhat predictable index, the economy or any of the normal things that most outrageously priced credit cards are tied to. Instead Bank of America can decide, at their discretion, to increase your rate to the maximum the day after you sign up. In fact if you sign up with a 10% maximum APR the next day they can change it (changing the credit terms) to a low 33% APR.

]]> Credit card companies frequently are coming up with new ways to sucker customers. The beleaguered industry is certainly not without its benefits but the methods used by many companies are outright slimy. Consider the advertisement in the mail from Bank of America. The ad for Zero Balance tells how I can get an unsecured loan of "up to $50,000* at competitive non-variable rates."

There is not even one little footnote symbol next to the "non-variable rates" portion that is highlighted in yellow for would-be borrowers. What does a non-variable rate mean? Is it the fixed rate that many would commonly think it might be? Well, no. While there is no footnote indicator there is an explanation in the fine light gray print on the back it explains:

By "non-variable rates" we mean that the APR will not automatically vary with an index, such as the Prime Rate. We reserve the right to change your APR, fees, or other credit terms at our discretion.

So it turns out that "non-variable" means they aren't tied to a somewhat predictable index, the economy or any of the normal things that most outrageously priced credit cards are tied to. Instead Bank of America can decide, at their discretion, to increase your rate to the maximum the day after you sign up. In fact if you sign up with a 10% maximum APR the next day they can change it (changing the credit terms) to a low 33% APR.

This sort of deceptive practice needs to be stopped. There are plenty of ways in which banks play with the process, but "non-variable" does not mean 'variable on our whim'. Maybe the FTC will investigate this deceptive advertising.

Bank of American has an online ad for a similar offering with the same non-variable APR.

]]> Chase angles for end-run around credit card companies http://addingunderstanding.com/2006/08/chase-angles-end-run-around-credit-card-companies 2006-08-06T23:10:07-06:00 2006-08-06T23:10:07-06:00 joshb Browsing the Apple Store there is a new payment method available. Buy Now Pay Later appears to be Chase's end run around the credit card companies. The terms are little different from your standard high-interest credit cards. Conveniently for Chase they forget to mention how long the grace period is before the high rates kick in. Over and over the frequently asked questions it makes the claim that fraud protection is "like credit cards" with no liability for fraudulent transactions.

One is left to wonder how many banks will setup similar end-runs around the big credit card companies in an attempt to keep more of the processing fees for themselves.

]]> Browsing the Apple Store there is a new payment method available. Buy Now Pay Later appears to be Chase's end run around the credit card companies. The terms are little different from your standard high-interest credit cards. Conveniently for Chase they forget to mention how long the grace period is before the high rates kick in. Over and over the frequently asked questions it makes the claim that fraud protection is "like credit cards" with no liability for fraudulent transactions.

One is left to wonder how many banks will setup similar end-runs around the big credit card companies in an attempt to keep more of the processing fees for themselves.

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