WASHINGTON -- 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.

While supporters argued Thursday 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.

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.

"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."

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."

Yet MBNA customers should not expect to get fewer come-ons in their mailboxes, other experts said. In fact, many consumer advocates predict Bank of America will aggressively market its services to these cardholders, tailoring solicitations to individual needs based on MBNA data since federal law permits affiliated companies to share customer information.

"Bank of America can now target those (MBNA cardholders) who missed a few credit card payments -- what a perfect opportunity to sell a second mortgage," said Harvard law professor Elizabeth Warren. To customers "who've recently moved, what an opportunity to suggest it's time to change banks."

In fact, in announcing the merger, Bank of America identified one of the benefits as being the "opportunity to deepen customer relationships" by delivering a wide array of services to MBNA customers.

Bank spokeswoman Alexandra Trower said the bank has provided innovative products and services for decades and will continue to do so after the merger, if it is approved by regulators. As for fees, she added, "we understand that to best serve our customers, we need to be competitive in that front as well." The bank will never be "an industry outlier" in that area, she said.

The proposed acquisition is by far the biggest in a string of credit card issuer mergers in the past five years. "This is just a sign of competition, and competition is always great for consumers," said Tracey Mills, a spokeswoman for the American Bankers Association. "There are still more than 6,000 issuers, which means customers have a myriad of choices; they don't just have to focus on the top issuers, but can broaden their horizons" to find different interest rates, rewards and incentive programs.

"It may seem like there are a lot of cards, but they are mostly from the same companies," said Ed Mierzwinski, the consumer program director for the consumer advocacy group U.S. PIRG. Mierzwinski advised consumers to "keep shopping around, especially when you get an offer from your existing bank. You can probably do better."

After the merger, the top 10 credit card issuers will account for nearly 90 percent of the market, according to Robert McKinley, president and chief executive of CardWeb.com Inc., which monitors the credit card industry.

"Consolidation generally means higher prices," McKinley said. In this case, he said, that probably means higher fees for balance transfers, foreign transactions and paper statements.

Privacy experts said there is no reason to expect a merged company to be lax on security, but they pointed out that a bigger database would be a more attractive target for hackers. "Security is only as good as the weakest link, and this machine will be full of links," said Evan Hendricks, editor and publisher of Privacy Times.

The merger may not be all bad news for consumers, said Linda Sherry of Consumer Action, an advocacy group that publishes an annual survey on credit card fees. "Our top complaint getter is MBNA, but I can't say we get a lot of complaints about Bank of America."

This story ran on The Detroit News on July 2, 2005.