Bank of America has started telling customers that it might increase the interest rate on their credit cards if they're late on payments.

Notifications sent with bills this month say the Charlotte bank can apply a "penalty rate" of up to 29.99 percent to future balances. The rate hike, if triggered, won't apply to existing balances.

The change comes as banks are adjusting to new guidelines for how credit card issuers treat their customers. They're also looking for ways to recoup lost revenue.

A law that went into effect last year requires issuers to give advance notice of interest rate hikes and limits increases for existing balances to customers who are 60 days late.

Consumer advocates weren't pleased with Bank of America's latest move.

"Bank of America is engaging in a system of bait-and-switch when it shifts interest rates to 29.99 percent for one late payment," said Adam Rust, research director for the Community Reinvestment Association of North Carolina. "In what other product line can a company redefine the terms of a business relationship?"

Penalty rates have been fairly common in the industry, as have rates as high as Bank of America's, said Greg McBride, senior financial analyst for Bankrate.com. Consumers who make their payments on time won't be affected by the bank's move, but those who don't could be in for a surprise, he said.

"There will be some sticker shock," he said.

Consumers who face this penalty increase can close the account and shop around for another card, he said. If it's a one-time slip-up, a consumer should be able to find a competitive rate, he said. Consumers who are habitual late-payers will have a tougher time.

The average annual percentage rate, or APR, on a variable rate credit card is currently 14.4 percent, according to Bankrate.com.

A Bank of America spokeswoman said a late payment won't automatically trigger a penalty rate. The bank will review the account to determine if the new rate is required, taking into account other risk factors.

The change will take effect June 25, according to a customer notice. If the new rate is applied, customers will be notified 45 days in advance. If it's implemented, the new rate will apply indefinitely, but the bank will review accounts periodically to determine whether the rate can be reduced.

The bank noted it has e-alerts to remind customers when payments are due. Customers can avoid the penalty rate by not using their card for new transactions.

The bank said it hasn't raised interest rates on existing credit card balances since the credit card reform legislation took effect last year, even if a customer is 60 days late, and it doesn't have plans to do so. Before the law, Bank of America had provisions in its credit card agreements that allowed it to raise rates for existing and future balances if customers missed payments.

The Credit Card Accountability, Responsibility and Disclosure Act, which was signed into law in 2009 and took effect last year, brought a number of benefits to customers. Among the rules: Card companies must give customers 45-day notice before they make significant changes to card terms, such as interest rate increases and changes to late fees. In addition, credit card companies are no longer allowed to raise interest rates for the first year after a customer opens an account; after that, rate increases can apply only to new charges.

But while the new rules offer greater transparency, some say they have prompted credit card companies to increase other fees to make up for their lost revenue.

Discover Financial Services raises its interest rate for late payments by as much as 5 percent above the cardholder's current APR, a company spokesperson said. Those penalty rates, which have been in place more than a year, apply to future purchases, not customers' existing balances, the spokesperson said.

At JPMorgan Chase, a penalty APR may be applicable if a customer fails to make a minium payment by the time due, a spokeswoman said. The company is in compliance with the credit card law and notifies customers in advance if they are subject to a penalty APR, the spokeswoman said.

Wells Fargo has done away with penalty pricing, a spokeswoman said. Only customers subject to penalty pricing before July 6, 2010, would be paying these higher rates.

Last week, Bank of America said first-quarter revenue in its card services unit, which includes debit and credit cards, fell 18 percent to $5.6 billion from the same period a year ago.

At the end of the first quarter, the bank said it had consumer credit card loans outstanding of $134.3 billion. About 4.8 percent of these balances were at least 30 days delinquent, an improvement from 6.8 percent a year ago.