Current Opinion

Banks to Avoid: Bank of America

It’s only my opinion.

What a topic! Sub-prime mess and all, banks are under scrutiny and it's hard to figure whiach are the best. The task of identifying the worst is just as difficult. Is it the credit card predator looking to make 100% per year on loans to what can only be described as the under-served communities? Or is it the huge institution in the big building downtown that asks for your trust in helping you build a future in the American dream; That big bank that holds your house as collateral in case you can't pay a month's interest due to a temporary illness or accident.

I have a client that uses Bank of America as a primary banking facility. Not by choice but because Bank of America bought his original bank.

Joe had taken out a second mortgage after a bout with two forms of cancer and never missed a payment. He also had a mortgage left over from several years earlier at a rate of 7.75%. A hefty rate in today's market , but he had an offer from the mortgage holder to rewrite the loan at a rate of 6.5% and a corresponding payment of two hundred dollars per month less than he was paying. He jumped at the chance. Everything all set to go; insurances changed; approvals set; all that was left was for the Bank of America to agree to hold its existing position as second mortgage to the original mortgagee. After all they were already the second mortgage holder to the exact same bank! No cash out except the closing cost; not a dime! Just a chance to help straighten out the finances of the debtor. Bank of America refused outright.

What does Bank of America have to say about who can give Joe a mortgage. Evidently everything! Even if it has no effect on Bank of America except to help one of its own debtors attain a better financial health.

You would think the banking industry would want its own debtors in the best possible position to pay back money owed to the bank. Not necessarily so. Many banks may have clauses in credit agreements that enable the bank to raise rates to higher levels based on credit scores, not the payments history of the creditor.

The most predatory of banks want the customer at their mercy at all times, unable to restructure financing, giving the bank the best opportunity to assure the highest interest rate possible. Are all banks like this? I don't know. Bank of America falls in the category of "Avoid This Bank". There are many alternatives that give the same services and until proven otherwise they have some semblance of concern for the customer.

Leave the credit card banks and Bank of America out of your financial plans and you may be more secure financially just knowing that you may possibly be with a bank that is in the financial "service" business.