According to the New York Times, Bank of America is buying MBNA.
This is another reason why consumers should avoid carrying a balance on credit cards if they are being charged interest. As more credit issuers merge, there will be less competition. With less competition, annual fees and interest rates will rise.
Update: CNN answers some questions about the future in the wake of this merger.
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{ 6 comments }
I really don’t see how this new conglomerate could be all that much worse than MBNA on it’s own! ;) It just looks like I’ll again become a Bank of America customer by default – they seemed to be buying every bank where I had an account when I lived in Kansas City ages ago.
That said, I don’t really see the situation ever getting to the point where lack of competition could even approach being more of a problem than CC companies being able to do whatever the hell they want because nobody’s bothering to police them anymore. But maybe that’s just me…
That’s kind of a shame. I’ve always liked MBNA, actually. And Bank of America has done nothing to ingratiate themselves on me so far with their buying of Fleet (who had bought Summit, who was my original bank). But it is getting out of hand. I noticed the other day that one of my cards (that I never use) apparently has a 29.9% APR! That’s just out of control!
Just bought 500 shares more of Bank of America (to make it 1000 even). I trust the Ability of the American public to get into debt up to their noses.
I know they will not let me down. I know they will keep paying interest to ME and My Bankc of America ;)
Just putting things in perspective.
Now, if you are smart… don’t get into credit card debt.
There’s competition amongst credit card companies for your business, just look at the rise of cashback rebates. I remember when Discover was the forerunner with 1%, now you can get 5%!
They can afford to have some good offers because they actually have customers who are paying 29.99% interest. The marketplace is competitive now, but with every merger, the remaining companies gain ground. If the eventual result is close to a monopoly, there will be major problems for people who carry balances.
That means also that MBNA’s credit limit would be reduced , just because the credit limit cap for BoA is $25000 instead of $100,000 from MBNA (except for Quantum which is $250,000) ?
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