Consumers who fail to pay their credit card debt on time may soon be hit with a sky-high penalty rate if their account is controlled by Bank of America.
The financial institution recently announced that it would begin applying a penalty rate of 29.99 percent to credit card accounts that fell delinquent, according to a report from Reuters. As required by federal law, affected accountholders will receive notifications 45 days or so in advance of the changes, which go into effect on June 25.
This is the second change to Bank of America-issued cards already this year, as the lender also added a $59 annual fee to about 5 percent of its credit accounts, the report said. The affected cardholders were viewed as being riskier investments for the lender. However, this penalty rate hike is the first such change the bank has implemented since the Credit Card Accountability, Responsibility and Disclosure Act took effect in 2009.
Many lenders are increasing their rates and fees in response to the Credit CARD Act, which restricted many predatory practices that drove revenues for the nation’s largest banks.