The reason why Bank of America (or any lender) jacks the interest rate up on people failing to pay is quite obvious - people will pay off the most expensive debt first and then work there way down to the low interest rate stuff. By positioning themselves as the highest interest rate, that lender gets paid first. But that makes the debtor more likely to simply default because the interest is killing any hope they had of escaping. Add in multiple lenders all trying to play the same game and it is no wonder so many are simply unable to get out of debt.
It would be nice if lenders really stopped giving loans and credit cards to these people in the future, but I think plenty of people will default and in 5 years be back on new credit cards and new mortgages that some will end up defaulting on again.
Or they go though it once and opt out of the system after that and live on cash. I know many people now that refuse to have a credit card as they became far too expensive in the long run.
It would be nice if lenders really stopped giving loans and credit cards to these people in the future, but I think plenty of people will default and in 5 years be back on new credit cards and new mortgages that some will end up defaulting on again.