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The Urge to Merge

This article was written by in Credit. 6 comments.

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.

Updated May 26, 2009 and originally published June 30, 2005. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about Luke Landes and follow him on Twitter. View all articles by .


avatar Jose

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.

avatar sean

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…

avatar Darren R. Sussman

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!

avatar jim

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%!

avatar Luke Landes

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.

avatar Alexis Rios

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) ?