U.S. PIRG Consumer Blog: MBNA To Be Part of BofA, More Bad News for Credit Card Customers

Today's news that Bank of America, the nation's largest domestic bank, is acquiring MBNA, the largest, by several measures, credit card company, is more bad news for consumers hoping that banks will compete with each other. Actually, what they mostly do is buy each other, leaving fewer competitors. Fewer, bigger banks means fewer choices and higher fees. The syrupy press release from BofA is touting all the supposed benefits to consumers. Don't believe it. And don't expect the regulators to disallow this merger-- they think bigger is better.

The highly-touted benefits of so-called financial supermarkets accrue only to the multi-firm company, not its customers.

Another issue is privacy. This particular merger gives BofA access to a huge treasure trove of information about milliions of credit card customers who are organized more uniquely than most any other bank's credit card customers. MBNA's customers are part of affinity groups it markets cards to-- people who went to the same college, people who like sports, members of the same union or civic or religious group, etc. With our weak privacy laws allowing all kinds of marketing by a bank's affiliated firms, regardless of a customer's preference, MBNA customers should expect to be bombarded with promises and offers and deals from BofA affiliates. Our best advice to all consumers-- keep shopping around, especially when you get an offer from your existing bank. The only customer banks offer good deals to are someone else's customers. You can probably do better than the offers your own bank makes to you.

Mergers also often result in errors. For example, if MBNA/BofA changes customer account numbers, watch out. Automatic credit card payments consumers have previously set up with regular billers could potentially be messed up.

For more on credit cards, see PIRG, truthaboutcredit.org.