After Bank of America saw $4.5 billion in credit card losses in the first nine months of 2009, the new chief executive will be taking his position next week and one of the first priorities will be to fix is the bank’s credit card business. According to new CEO, Brian Moynihan, his main priority is to get his hands around the problem as soon as possible.
Card Population Control
As the second-largest U.S. credit card issuer, after J.P. Morgan Chase & Co., the bank has a lot of cards that have circulated to the public. In fact, according to the CEO, there are too many card users in general population. His goal is to reposition the business so that it will rely less on borrowing and more on card transactions, even though it may result in fewer profits than the 23 percent that the card division currently brings into the company.
Adjustments Will Be Made
According to the bank, in addition to placing a greater emphasis on card transactions, it plans to:
- Make faster decisions with delinquent customers: The bank said it took too long to cut credit lines on delinquent customers; however, it will make this adjustment in the new year.
- Reduce the number of cards it sells to one customer: In the past, branch employees and managers were paid based partially on how many different products they could sell to existing customers. Now, the bank wants to sell multiple products to one household versus one customers to help reduce the likelihood of default and encourage responsible financial practices.
- Have customers work with “personal bankers” to obtain cards: Instead of having customers obtain credit cards through bank tellers, now B of A plans to have customers step out of line and work with a personal banker elsewhere in the branch who will engage in a more in-depth conversation about the credit card application process and better determine who is eligible to receive a card.
The new CEO hopes that these adjustments will help create better experiences for customers who obtain Bank of America credit cards and ensure that the bank is able to make profits in the New Year.
Do you think this plan will work for Bank of America?
I don’t know – I have a lot of friends who canceled accounts with Bank of America because they were unable with the service. But at least the head guy sees the problem and he’s trying to fix it – and that’s a start.
I’ve personally had a lot of problems with BofA charging random fees. At least it makes me vigilant in checking my statements.
just had 3 cards cancelled by BofA on Dec. 30th, 2009. 1 personal and 2 business. All had near $0 balances on them. I checked and I have a 768 FICO with no recent credit apps or changes on my report. The only card not cancelled was a business card with a sizeable balance on it. So after paying BofA thousands of dollars in interest over the last 3 years, enduring interest rate increases over the last year, and not getting more than a few dollars in interest on my 5 figure checking account balance – they send me cancellation letters and don’t bother to call me. I am going to pay off the balance on the remaining card in the next month and close my accounts with them ASAP.
Me too, I actually left BOA and went to a whole new bank. It was just too much drama.
I guess…