Bank of America's purchase of MBNA marks the latest consolidation in the credit-card industry, which may translate to higher costs, fewer...

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NEW YORK — Bank of America’s purchase of MBNA marks the latest consolidation in the credit-card industry, which may translate to higher costs, fewer choices and poorer service for consumers.

The deal, expected to be completed by the end of the year, will create one of the largest credit-card operations in the nation.

The combined outstanding card balances of Bank of America and MBNA of $134.8 billion as of March 31 would surpass the receivables of the top issuers, according to Robert McKinley, chief executive of in Frederick, Md. The current No. 1, JPMorgan Chase, had $133.4 billion in card balances as of March 31, followed by Citigroup with $115.8 billion.

And the acquisition is the third in recent months in which a stand-alone card issuer like MBNA has linked up with a major bank.

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Earlier this month, Washington Mutual, the nation’s largest savings bank, expanded into the credit-card business by buying card issuer Providian Financial. In March, the reverse happened when credit-card issuer Capital One Financial said it was buying the Louisiana regional bank Hibernia in an effort to expand from direct-mail marketing to branch-banking outlets.

Stephen Brobeck, executive director of the nonprofit Consumer Federation of America in Washington, D.C., said the latest deal contributed to growing concentration in the credit-card market.

“This can’t but help raise the concern that there will be less competition providing consumers with attractive rates and other [borrowing] conditions,” Brobeck said.

David Balto, an antitrust attorney with Robins, Kaplan, Miller & Ciresi in Washington, D.C., thinks consumers may already be feeling the impact of the card industry’s consolidation, which also has been the result of bank mergers.

He noted that the top 10 card issuers now control more than 80 percent of the market.

“As the market has become more concentrated, there’s been a significant increase in fees to cardholders,” said Balto, who formerly served as policy director for the Federal Trade Commission.

He added: “The card industry will tell you that people have many choices. But in reality, the choices are relatively limited.”

It’s also an industry that is hard for new companies to break into because of high capital requirements and technology needs, Balto said.

Jim Lerdal, chief operating officer of Pinnacle Financial Strategies, a Houston-based firm that provides overdraft products to banks, said another concern is the hit that customer service often takes because of mergers.

He noted that Bank of America already has said the deal will result in eliminating some 6,000 jobs.

“I think we’ll continue to see more movement to never having the ability to talk to a live operator and more depersonalization of service from the point of view of the consumer,” Lerdal said.

On the other hand, he said, this is “truly an opportunity” for smaller banks to go after disenchanted consumers because these financial institutions can offer “personal relationships and services where somebody is not halfway around the world answering the phone.”

Another consideration is that MBNA not only issued its own credit cards but also issued cards on behalf of a variety of banks, including Bank of America competitor Wachovia. Wachovia, like Bank of America, is based in Charlotte, N.C.

Fitch Ratings agency in New York pointed out that MBNA’s roster “does include some large banks — Wachovia for instance — that were comfortable having this arrangement with MBNA but are not likely to have this comfort with having Bank of America serve their customers.”

Shares of MBNA soared after the deal was announced, gaining $5.09, or more than 24 percent, to close at $26.16. Bank of America shares fell $1.30, or 2.7 percent, to $45.61.