Waiting for a Giant With Fear and Favor; Critics Say a Merger of Credit Card Firms Will Hike Fees, but Others See Competition at Work
Bank of America's plans to buy MBNA Corp., creating a credit card giant, give new fuel to the debate over whether consumers are better served by bigger companies.</br></br>While supporters argued yesterday that the deal would give customers access to a wider array of services, some consumer advocates warned that the merger could reduce competition and drive up interest rates and fees, as well as pose new privacy concerns.</br></br>A merger between Bank of America, the nation's fifth-largest credit card company, and MBNA, the third-largest, would create the largest credit card issuer in the country, as measured by balances outstanding. The company would account for one of every five dollars charged on plastic.</br></br>"This is horrible for consumers," said Robert Manning, a Rochester Institute of Technology professor and author of "Credit Card Nation," a critical look at the credit card industry. "There will be fewer options and fewer big players."</br></br>Consumers, who now are often charged $39 in late fees if their payment arrives past the due date, "can expect $50 late fees coming up on the horizon, within a year or so," Manning said. They also can expect to see the rash of promotional low-interest rate offers shrink, he added. "MBNA was the most generous in balance transfer offers. If that's off the table, this will be the beginning of the end for people with a lot of debt who played the rotating credit card debt game."