Posts Tagged 'rate'

Save (virtually) nothing with Bank of America’s auto loan

Susan Tompor had a great article in the Detroit Free Press about banks getting back into the auto lending business. She noted that Bank of America was offering a stellar-sounding rate on vehicles:

Bank of America has a low rate of 2.89% in Michigan on new car loans of up to 60 months. The loan has a $200 fee and the borrower must have excellent credit.

Now, that 2.89% “low” rate does sound great. But how does the math work?

Here’s an example. Let’s say we take a plain old car loan, with no money down and no trade-in, for $20,000. Pay Bank of America’s $200 fee and the rate, and you end up with a monthly payment of $383.38. In the end, you’ll pay $21,400 for that new car when the loan is paid off (we’re using our handy auto loan calculator for these numbers).

Now, take that same $20,000 auto loan to American 1, where you pay no fees but you pay a slightly higher interest rate of 3.49% at our low end. That leads to a montly payment of $385.57 – two whole dollars more expensive than BoA’s payment. In the end? You’ll pay $21,200 for that vehicle, which is exactly $200 – or the cost of that BoA fee – less in total.

Isn’t that something?

Tompor quotes a BoA representative who sounds giddy to get back into auto lending:

Doug Melton, direct-to-consumer underwriting manager for Bank of America, said the bank is optimistic about car lending in 2011 and is aiming to offer competitive rates for loans on new and used vehicles and lease buyouts.

“There are a lot of great customers out there looking for new cars, used cars and looking for financing,” he said.

“Competitive” being the operative word. The most you’ll save is $2 a month, no matter how competitive that rate looks compared with ours or anyone else’s.

Isn’t it better to do business with a local institution who charges no fees and is a phone call away when you need service?

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Big bank balance transfer rates going up

Bad news if you play the credit card balance transfer game, says MSN Money:

In July, JPMorgan Chase, the largest credit card issuer in the country, cited the new federal regulations when it sent letters to its customers informing them that the bank will increase its maximum balance transfer fee to 5% — the highest charged by any issuer. Subsequently, the company stopped including balance transfers in most of its new offers.

…Bank of America – the second-largest issuer – has increased its maximum balance transfer fee to 4%…The standard balance transfer fee had been about 3% – and some issuers also limited the total fee, often to less than $100, with caps.

From the research we’ve done, most big bank credit card issuers charge some sort of balance transfer rate on top of the regular rate for each transaction total.

American 1? We don’t charge any balance transfer fee.

The wild, wild west of the credit card world

PBS’s Frontline ran a special called “The Card Game” in November on how the credit card industry hurts customers with exhorbitant fees and interest rates.

Watch the second part, especially, to get an idea of what every day consumers face with rising costs.

Big banks get desperate on credit cards

So that big Credit CARD Act that’s due to hit financial institutions next year? Big banks are scrambling to set up more fees and more interest rate hikes to get your money before the act goes into affect.

Bank of America is testing an annual fee on 1% of their cardholders (that’s 800,000 people, all together).

“We’re testing this to see what the feedback is,” said Bank of America spokesperson Betty Reiss. “In terms of any plans going forward, we haven’t made any decisions yet.”

Here’s a clue, Betty: feedback is going to be negative.

Lucky for them, BoA has chosen not to raise their card rates, but an annual fee means if you’re holding a Bank of America card, you could be paying more.

Meanwhile, Wells Fargo is going to raise rates on its card-holding customers, says the South Florida Business Journal, by up to 3%. The new ouch-worthy rate will affect “most” of Wells Fargo’s credit card customers, whatever that means. “Most” usually means “more than half,” so it’s going to hurt a lot of people.

Exposed: American Express raises fees

amexfees

One of our employees here at the credit union received this letter from American Express informing them that – guess what? – AmEx is raising rates and fees.

Big surprise, right? We’ve seen this before.

AmEx calls it a “price change notification,” which translates as “you’re going to pay more to use an American Express card.” For example, our American 1 employee will pay prime rate plus 21.99% APR on any cash advances, which – as of today – equals 25.24%. Here at American 1, our cash advance rate is the same as our everyday Visa rate.

This letter is another example of big bank credit card companies raising their fees and interest rates to bail themselves out of the mess they got themselves into. And you pay the price for their mistakes.

For more information on big bank credit cards, visit our Top Secret Visa site.

Three days late on your Visa? BoA jacks rate up to 30%

Talk about the punishment not fitting the crime.

The Consumerist tells the story of some poor chap who was one and three days late on his Bank of America Visa payment. He’s a good customer, has a mortgage with the giant bank, and has a great credit score. His punishment? An interest rate of almost 30%. This is a common practice with big banks, as we’ve outlined on our Top Secret Visa web site.

The guy’s brother tells it like it is:

Bottom line: Don’t take those warm and fuzzy bank commercials—where they show the loving banker taking care of their customers—seriously. The bank doesn’t care about the customer.



Who has better interest rates?

Credit unions, of course. And here’s proof. It’s a survey, by NAFCU, of state credit unions and banks – showing their lowest, highest, and average interest rates for auto loans, money markets, certificates, etc.

Credit Unions consistently beat banks’ interest rates – lower for loans, higher for savings – because we are member-owned and not-for-profit.