Bank of America review: fixed to variable interest rate 59

I too suffered the same fate. I have had my BofA Gold Line originally when it was with MBNA. I have great credit, never been late and always pay more than the minimum. In the past they have even lowered my rate to 5.99% as a thank you. I'm now at 7.99% and I called about this new rule and apparently there is nothing we can do to opt out of it except pay the bill off (umm, I am going to need someone's yearly salary to pay this bill off!). I had the service rep do some numbers for me ranging if the rate jumps from 0.25 to 1.00 increase in the prime and it's still at the point where I am sending more than what the increase is. I am pissed because I send more so I can pay the bill off sooner than later. I realize the FEDS are meeting on November 4th and I hope something is done about this. Having good credit these days appears to be the real mark of the beast. I have about 5 years left to pay on this bill and pray I can get it done quicker considering this latest SCAM...

Please keep me in the loop as well if there are any lawsuits. I'd be glad to join in.

KennaOdeghe@gmail.com

This is interesting. I work for another large bank and we actually did this with much of our credit cards. We looked into switching our unsecured personal loans as well, but were stopped by the OCC due to regulations for personal loans differing from that of credit cards. I wonder how BofA got through that red tape? Very interesting indeed...

I found the original solicitation letter, from Bank of America, trying to get me to open the Gold Option LOC (aka CleanSweep LOC).

It states the following:

"Congratulations. You're pre-qualified for a Bank of America CleanSweep (aka Gold Option) Line of Credit with a credit limit of up to $50, 000 at non-variable rates that may give you the means to help eliminate many of your high-interest debts.

You put up no collateral. You pay no application fee, no annual fee, and you can setup your account in as little as 10 minutes. It's quick and easy.

. . .The CleanSweep Line of Credit (again, aka Gold Option LOC) offers non-variable rates as low as 8.99% APR, which may be much lower than interest rates you're paying now. Plus, because the rate is not a variable rate tied to an index (such as the Prime Rate), it will not automatically fluctuate when the index changes. You get to request the initial payment that best fits you budget.

Another . . ."

Pretty amazing that they sucked us in with these descriptions, only to put in the fine print (after you accepted the loan and had the money on it's way to your bank account) that they can modify the terms of this agreement.

I'd say the "misleading" charge is definitely there. I think we may have to agree to file a complaint & claim with the Arbitrator first:
National Arbitration Forum ("NAF")
Rules and forms of the National Arbitration Forum may be obtained and Claims may be filed at any National Arbitration Forum office, www.arb-forum.com, or P.O. Box 50191, Minneapolis, MN 55405, telephone [protected].

You may wish to contact an attorney prior to contacting NAF. I may do it this way - I'm not what the first way is that I'm going after them.

Please keep me posted on this I too am suffering the same fate. I would like to get in on the class action suit as well
teachack@yahoo.com

I also received the same letter indicating the rate change from variable to fixed. I have contacted two class action law firms and have not received a response. I also filed a complaint with the Fed (a lot of good that will do I am sure) and I filed a complaint with the section of the US Treasury responsible for monitoring national banks (again, I don't expect anything. I also sent an email to the worthless leadership of the House Banking and Finance Committee, and shocker I received no response.

I called BOA and received the same answer as everyone else. They already have me at loan shark rates, I can't imagine what will happen once the Fed starts to monetize the debt. They are trying to get me to sign up with a debt management plan, the only way they will lower the rate and change it back to a fixed rate. I have never been late with this payment or any others and I have good credit, so I don't think joining in a debt management plan is for me nor should I be forced into it by BOA. I just want them to honor the contract. I was told repeatedly when I applied over the telephone that it was a fixed rate for the life of loan. This is beyond amazing to me.

Same story for me, for almost 5 years now I had my line of credit (I opened it with MBNA) and now BOA changed my fixed rate to a variable. What really makes my blood boil in this situation is the fact that BOA gets billions of bailout money only to turn around and stick it to us.

I called BOA yesterday and was given the exact same story mentioned in other posts, I took it one step further though and threatened NOT to pay if they continue with the change. I asked to speak to a supervisor and was one wasn't available at the moment, they took my number and told me they will get back to me. This hasn't ended there, I will fight back!

I have also started asking friends to help me boycott Bank of America, I know it is like David going against Goliath but it only takes one stone to bring the giant down...

While it is probably not a violation of any contract law due to the fine print, BOAs actions would certainly fall into category of misrepresentation. All one has to do is read this a few times and let it really sink in to see that is so – BOA changed the rates on fixed rate loans to variable rates. I would think that a class action lawsuit would collect damages, which there will be. As soon as the APR moves up, the damages will be provable, and the only satisfactory outcome will be that BOA is made to pay said damages as the accrue until such a time that they change rates back on all impacted loans to the original, agreed to, fixed rates.

Although, is this perhaps a violation of contract law that such a provision even exists? Is it possible that the simple statement of the provision is in and of itself a violation of contract law? In other words, was there a violation of contract law even before the decision to act on the provision was taken?

To state it simply – how is it possible that something which is described in a contract as a “fixed rate loan” is contractually not a fixed rate loan? To me this is the same as the contract clearly stating that you are purchasing 100 apples for $10, but there is also fine print saying that the seller reserves the right to send you a single dirty shoe instead of the apples. The company keeps selling 100 apples for $10 and things are ok, then all of the sudden decides it will ship only single dirty shoes to all of its customers.

Another example – if I craft up a contract that you sign that clearly states that I will plow your driveway every Friday in 2009 if there is more than 1” of snow accumulated, but I also write in tiny print on the back of the paper that I will also bash your head with a baseball bat every Tuesday during the same period, is my subsequent action of bashing your head with a baseball bat on Tuesdays legal because it was stipulated in the contract that you signed? Or is the contract itself in some way not binding because of the absurd nature of its contents, and hence the head bashings are potentially illegal?

Look into precedence in class action and other lawsuits where misrepresentation was decided.

I would appreciate a copy of the original account agreement. This so-called “business decision” by BOA, while likely supported by the fine print, is so reprehensible that I am puzzled by it. Their actions were clearly misleading, perhaps so much so as to be criminal. I would certainly like to explore the process of class action in this case. I have no law background, but have studied banking and economics at graduate and post-graduate levels, have worked in banking, and hold in MBA.

I also worked for some time for BOA. I am so glad that I am no longer associated in any way with a company that would do this. This will hurt many individuals who have carefully made necessary credit decisions, and may damage the bank’s reputation to such a degree that we may still not be in the clear with the state of our country’s financial system. This is one of the most preposterous things I have ever heard of! It is cliché, but I honestly do not know how the people who made this decision can sleep at night.

I spent a great deal of time negotiating for the “fixed rate” I got on a personal line of credit, only to find out that all of those conversations were entirely meaningless. After berating the poor CR on the phone the other day, I half in jest asked the poor guy if they were considering the same sort of arrangements for my mortgage. At which point he asked if I wanted to be transferred to that department……I would recommend trying to get as many people to understand what has happened here- Has anyone put up a website specific to combating this? I don’t have much spare change (especially now!), but would be willing to assist in any way possible.

I wrote the White House regarding the currect situation with Bank Of America and this is the response I received today:

Dear Friend:

Thank you for contacting me to voice your concerns about credit card companies. I am committed to addressing unfair credit card practices.

Today, the subject of credit is on the minds of many Americans, including how families finance everything from car purchases to college education, and how businesses get the capital to expand and succeed. I have heard from people across the country who have had their credit lines reduced and interest rates increased without clear justification. These questionable practices have compounded the impact of the current economic crisis on our families.

My Administration has enacted reforms that will help eliminate abuses in the credit card market. I worked with Congress to pass the landmark Credit Card Accountability, Responsibility, and Disclosure Act (CARD). This law promotes greater fairness, transparency, and accountability in credit card practices. It requires companies to inform credit card holders of payment timetables and accrued interest, and ends retroactive rate hikes and sudden changes to terms and conditions. These reforms will have a tangible impact on the ability of American families and businesses to achieve their goals.

Consumer protection is critical to a healthy credit system. For this reason, my Administration is committed to protecting responsible borrowers and demanding fairness in the credit card market. To learn more about CARD, please join me online at:
www.whitehouse.gov/issues/economy. For information on
credit and consumer protections, please visit www.mymoney.gov/credit.shtml or call 1-888- MYMONEY.

Thank you again for writing.

Sincerely,

Barack Obama

To be a part of our agenda for change, join us at www.WhiteHouse.gov

Same thing happened to us. We have two gold option accounts tied to our small business, and we recieved letters today saying we were switching from fixed rate to variable rate. We have a great credit score, no late payments, etc. It doesn't seem to matter to them. We would be interested in fighting this also.

My story is also the same. I called BofA yesterday to opt out of the change and was told that was not available as this was a LOC and not a credit card. I explained that I was guaranteed that it would remain a fixed rate and was told that the disclosure at the time of opening the account stated they could change the rate at anytime. Even their letter along with the change was a little misleading. Normally, when a change of this sort happens, the notice of the change needs to be bold and their letter seemed more like housekeeping. Needless to say, I was not happy and it was evident that BofA does not care about keeping any business.

Greenelee, I have the original account agreement and will be happy to email it to you if you can't find yours.

That was an error. It wouldn't let me post so I did a test and of course that went through. Anyhow, thank you Buddy W. for all the infor. I'm going to submit my complaint a.s.a.p. Darlene, I'll check this week and see if I happen to have the original account agreement yet. I may have it but I have to do some digging. How can they do this to us? Don't we have rights? I never knew they could take a fixed loan and turn it into a variable. It sounds like we all took out this loan with the same understanding. FIXED rate loan and it was guaranteed to stay fixed. I'm in on a class action should someone get one going!

My story is like so many others. I hope that Bank of America loses many customers over this! I have had a fixed rate Gold Option loan for over three years, and have never been late or over the limit, and my rate was just changed to a variable that is tied to the prime rate. Another way for BOA to rip eveyone off! According to their customer service rep, this was a business decision and should not make my payment go up…yeah right! That’s true as long as the prime rate is 3.25% but what happens when it goes up to 8.25% or even higher? BOA has figured out a way to make it appear that they haven’t increased your rate, yet they know that prime will eventually go up and so will everyone’s rates. Take all of your money out of BOA and take it to a bank that demonstrates honesty, integrity and fair business practices. Someone should definitely file a class action lawsuit over this. If anyone needs a copy of the original account agreement, please email me at nations63@aol.com.

— Darlene

Also, I will be filing a complaint with the Comptroller of the Currency, my state Attorney General, federal reserve and the FTC.
http://www.occ.treas.gov/customer.htm
http://www.naag.org/attorneys_general.php
https://www.federalreserveconsumerhelp.gov/FormComplaint.cfm
https://www.ftccomplaintassistant.gov/

Same here . . .I can't believe it. Interest rates are at historical lows. The government has printed lots of money and done tons of bailouts. Inflation & higher rates are sure to come. Granted, there are debates over how soon much higher levels of inflation will show up and how soon the Fed will or will not raise rates, but it will be here eventually.

So, Bank of America, knowing that interest rates are probably not going lower and will likely go higher, changes our rates to variable rates and sets the variable rate at our fixed rate. They didn't say, well, we're going to a variable rate but, good news, your starting variable rate is lower = hopefully, compensating you for the fact that there will probably be days in the future where it'll be higher than your current fixed rate. No, they choose to start our variable rate at our current fixed rate. So, that is awesome for them. However, based on various economic variables, there is no chance/probability on earth that we'll likely EVER see our rates lower than we have now.

While Bank of America's decision would seem to put them at a "no lose" situation, I thought about buy some of their stock to offset the risk of higher interest rates. So, when my rates go higher, I have a chance to benefit from their increased revenues. HOWEVER, as some others have commented, I see people defaulting on their Gold Option LOC and/or stopping to pay it the minute the rate/payment goes up. In fact, people that are debating that option might just wonder why they'd be making payments right now if that's the likely inevitable = if they are going to end up doing this and ruining their credit in 24 - 36 months anyway, why would you give Bank of American another 24 - 36 payments now?

Lastly, I see the door open for a class action lawsuit against their misleading practices. It doesn't seem to matter whether there was any fine print in the pages and pages of paperwork we signed for this. The fact is, in this current and recent economy & economic environment, people don't have a lot of sympathy for the big banks like they do for the struggling consumer that's finding it hard to maintain their lifestyle & pay bills.

I plan to do some searching on my own, but if anyone finds an attorney willing to take on a class action lawsuit, please post the information here - so we can all know about it & stay informed.

Thanks.

Same story here... always paid more than minimum. Never late.

The ONLY reason I opened account was I was told it was a "fixed rate loan". When I called to complain and said I wanted to record the call because I had been lied to in the past you should have seen the reaction!

The most frustrating... going to the branch and being completely ignored because they "don't handle that". WTF?!

Our government really failed us with BofA. I'm really surprised no one has (yet) resorted to violence out of complete frustration.

Your story is the same as mine. Wish I knew what I could do about it! I was told that if I have a budget I can apply for the Heartship program but they would not provide me with any written material on that.

I agree. I Have the exact same situation. Got my letter today telling me my fixed rate loan was going to change to variable. I am now going to have to find some sort of other loan arrangement. I cannot afford for my payments to go up, which they certainly will as the prime rate goes back up.

If it wasn't for the fact that i have really good credit, i would chose not to pay anything back. This is bate and switch and will en the end result in a lot more defaulted loans.