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Starting June 25 of this year, Bank of America will start charging more and more of their credit card customers an APR of almost 30%. According to a letter that came in the mail today, that new rate would apply "indefinitely." If you make a single late payment, B of A may raise your interest rate to as much as 29.99%. The new rate would only apply to new purchases, not existing balances (that's one of the few good things about the CARD act), but according to recent surveys over 15% of customers have made at least one late payment in the last 12 months. (I know we've done it once or twice.)

From a free market perspective, the new late payment policy isn't terrible, but in practice it still stinks. That's because, like most fees and penalties charged by banks and credit card companies, it will be more onerous for the poorest and most vulnerable. Think about it, if you have good credit and a good job, who cares if you make a late payment? If your credit card company assesses a penalty rate of 30% on new purchases, you can just switch to a different card. But if your Bank of America card is your only source of revolving credit, then you're pretty much stuck with the new interest rate. And over time, more and more customers will end up with the new penalty rate because of a late payment. Moreover, it will end up being those customers who can least afford it who end up paying the new rate because B of A will most likely refrain from instituting high penalty rates on customers they know can simply walk away.

In other news, the Federal Reserve plans to keep short-term interest rates near zero, so you can expect to receive a "penalty rate" on your savings -- indefinitely.