Bank of America to hike interest rates for late payments

By Blake Ellis, staff reporter

NEW YORK (CNNMoney) -- Bank of America customers who make late payments on their credit cards may soon see their interest rates jump.

Beginning June 25, the nation's largest credit card issuer will introduce a penalty interest rate of up to 29.99% on future balances for credit card customers who fail to make timely payments.

The rate will vary based on a customer's credit profile, and one late payment won't automatically trigger a 29.99% penalty rate, a Bank of America (BAC, Fortune 500) spokeswoman said.

Bank of America hasn't charged a penalty rate since the Card Act was introduced in 2009 -- which limited issuers from raising rates on existing balances.

But issuers weren't prevented from raising rates on new balances. They just have to notify customers at least 45 days before raising the rate, as Bank of America said it will do.

Other issuers, including Chase (JPM, Fortune 500) and Citi (C, Fortune 500), are already charging penalty rates ranging as high as 29.99%.

In addition, the Federal Reserve is considering a cap on the fees banks can charge retailers when consumers swipe their debit cards. Speculation about the new "swipe fee" regulation has led banks to make many changes to terms and conditions in recent months.

Bank of America is also testing a $59 annual fee for its riskiest customers. Other issuers have eliminated debit rewards programs, tested $5 ATM fees, introduced monthly fees on checking accounts and threatened to put a spending limit on debit cardsTo top of page

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