Bank of America's Payment Holiday
If you have a credit card with Bank of America and you access your account online, you may have noticed a message that says, "Take a payment holiday. This month's payment is optional." Sounds great, doesn't it? Here's a good rule of thumb: any time a credit card company offers you something that sounds great, it is probably a great deal for them and a terrible deal for you.
When you click on the link to learn more, Bank of America tells you that "[a] payment holiday allows you to skip a monthly payment on your credit card, GoldOption, or GoldReserve account. If you omit a payment, finance charges will continue to accrue on your balance."
And that's all they tell you. There's no more fine print or further explanation. I'm horrified by this. Why? Because I think that unsuspecting consumers will get themselves into trouble with this offer, and I think that's exactly what Bank of America is hoping for.
If I didn't know better, I would read that and think I could just not pay anything for a month with no consequences.
But I know better, and I know what questions to ask. I notice that they don't tell you whether you have to specifically request a payment holiday, or whether it will kick in automatically if it's shown as available and then you don't pay your bill. It doesn't say whether omitting a payment will cause your interest rate to go up. It doesn't say anything about late fees. It doesn't say what happens the following month. Will your minimum payment go up since you skipped the minimum payment for a month?
My best guess as to what a payment holiday is, from the limited information available and my own experience and knowledge, is that if you don't send in any payment for a statement where you've chosen to take a payment holiday, which you better call them up and ask for, get the name of the person you talked to, then send a letter by certified mail that confirms your conversation, you won't be hit with a late fee, they won't hunt you down for not forking over your $15 minimum payment, and they won't report your account to credit reporting agencies as being late. However, you might have to call them later and argue about whether they gave you a payment holiday or not because you might one day discover that your payment is "late." Also, during the payment holiday, you will rack up interest on the entire amount you owe.
I suppose that if you are already carrying a balance on your credit card, this would kind of be a good option. Presumably, if you are already in debt, you might be having trouble making ends meet and getting all of your bills paid, so being able to skip the minimum payment for a month might mean being able to pay the cell phone bill and that you're only paying interest on another $15 (or whatever your minimum payment is) that you wouldn't already be paying interest on. I don't know if Bank of America is extending this offer to customers that fit this profile, though.
If, however, you are the type of customer who normally pays your bill in full and on time but you see this offer and decide to take advantage of it because you're having a tight month, you might suddenly find yourself in a world of trouble because of the finance charges you will accrue. The finance charges, the current bill, and the regular expenses you will put on your credit card in time between your current statement and the next statement will make it even harder to pay your next bill in full and on time. You might suddenly find yourself in credit card debt almost completely by accident.
If this deal actually benefited consumers, Bank of America would be a lot more forthcoming with the details. In reality, they only give consumers a bare minimum of information, and that smells like trouble. Bank of America's supposed payment holiday is a raw deal for consumers. Just say no.
When you click on the link to learn more, Bank of America tells you that "[a] payment holiday allows you to skip a monthly payment on your credit card, GoldOption, or GoldReserve account. If you omit a payment, finance charges will continue to accrue on your balance."
And that's all they tell you. There's no more fine print or further explanation. I'm horrified by this. Why? Because I think that unsuspecting consumers will get themselves into trouble with this offer, and I think that's exactly what Bank of America is hoping for.
If I didn't know better, I would read that and think I could just not pay anything for a month with no consequences.
But I know better, and I know what questions to ask. I notice that they don't tell you whether you have to specifically request a payment holiday, or whether it will kick in automatically if it's shown as available and then you don't pay your bill. It doesn't say whether omitting a payment will cause your interest rate to go up. It doesn't say anything about late fees. It doesn't say what happens the following month. Will your minimum payment go up since you skipped the minimum payment for a month?
My best guess as to what a payment holiday is, from the limited information available and my own experience and knowledge, is that if you don't send in any payment for a statement where you've chosen to take a payment holiday, which you better call them up and ask for, get the name of the person you talked to, then send a letter by certified mail that confirms your conversation, you won't be hit with a late fee, they won't hunt you down for not forking over your $15 minimum payment, and they won't report your account to credit reporting agencies as being late. However, you might have to call them later and argue about whether they gave you a payment holiday or not because you might one day discover that your payment is "late." Also, during the payment holiday, you will rack up interest on the entire amount you owe.
I suppose that if you are already carrying a balance on your credit card, this would kind of be a good option. Presumably, if you are already in debt, you might be having trouble making ends meet and getting all of your bills paid, so being able to skip the minimum payment for a month might mean being able to pay the cell phone bill and that you're only paying interest on another $15 (or whatever your minimum payment is) that you wouldn't already be paying interest on. I don't know if Bank of America is extending this offer to customers that fit this profile, though.
If, however, you are the type of customer who normally pays your bill in full and on time but you see this offer and decide to take advantage of it because you're having a tight month, you might suddenly find yourself in a world of trouble because of the finance charges you will accrue. The finance charges, the current bill, and the regular expenses you will put on your credit card in time between your current statement and the next statement will make it even harder to pay your next bill in full and on time. You might suddenly find yourself in credit card debt almost completely by accident.
If this deal actually benefited consumers, Bank of America would be a lot more forthcoming with the details. In reality, they only give consumers a bare minimum of information, and that smells like trouble. Bank of America's supposed payment holiday is a raw deal for consumers. Just say no.
Comments
However, one thing to watch for: some CS Reps are inexperienced and will tell you, you got the Holiday. But they don't (?) know the Holiday really won't be approved, and you get stuck with being "late" from missing the payment. Well, this happened to me. I called BoA's Customer Service today (8/26/8) and the Rep checked on that, agreed it was their mistake and not my fault. She reversed the late fee and even restored my original interest rate.
My experience with BoA is, if you ask politely and have your facts (notes of your conversations with Reps, your bills and notices etc. all organized and right there) you will likely get justice about such things.
"tyrannogenius"