Bank of America Puts Spin on Card Rates

Odysseas Papadimitriou is founder and chief executive officer of Evolution Finance, the parent company of Wallet Blog and Card Hub, an online marketplace for credit cards.

CHARLOTTE, N.C. (TheStreet) -- Bank of America(BAC Quote) recently said it would stop raising interest rates on existing customers' credit cards. The decision comes before the Feb. 1 deadline mandated in the Credit CARD Act. It's a step in the right direction. However, there is an issue that hasn't been raised that would put this announcement into better perspective: How much of Bank of America's existing credit-card portfolio is affected?

Even after the bank has re-priced millions of credit-card customers into higher interest rates, the national media seem to be treating Bank of America's move as a sign that the North Carolina-based bank is falling in line with the spirit of consumer rights -- that it's ended the practice of raising rates in the midst of a credit crunch. Unfortunately, it's not clear what this announcement actually implies, given that the media have toed the company line and haven't asked the necessary questions.

The key question is: How many customers still have a low rate that's not part of an introductory offer? If the bank has millions of customers below a 10% non-promotional interest rate, this announcement has merit: Bank of America's assurance not to raise those rates matters. If, however, there are only, say, 100,000 customers that have a low non-introductory rate, the decision affects only a small number of people -- too small to deserve the kind of attention the bank has enjoyed.

I don't want to be cynical about possible good news, but my experience says Bank of America has already re-priced everyone that it had planned to. The move implies that Bank of America is making an active attempt to be pro-consumer in its operations, while in reality, it's likely that the company has simply finished re-pricing its portfolio of credit cards. If so, the announcement is nothing more than an attempt to create media coverage out of standard operating procedure. Perhaps worst of all, the media seem to be buying into the spin and is now providing Bank of America with much-needed positive PR by recasting the bank as a mighty corporation that remains in touch with the needs of its customers.