Bumped credit card interest rate!

[do97jdl]

I need to rant a bit. I opened a credit card account with Bank One/Amazon about Sept., 2003, which had a zero percent intro interest rate for one year! Seemed like a great deal, and since my credit rating was excellent, they put my credit limit of about $12,000.
I took advantage of the deal by using this card only, transfering higher card balances, etc. but, I always paid more than the minimum payment every month and on time. I still carry a fairly high balance though.

Well, by the time the year was up my interest rate was still pretty good at 9.98%. It has since edged it's way up to about 10.5%, still not bad.

Now, surpirse, since Chase took over for Bank One, they sent me a notice that my interest rate will be going to prime plus 19%....a minimum of 23% plus!
I am livid! Since I closed out many of the other cards I had previously owed, mostly to simplify, I will have to reapply all over. Of course with the new bankruptcy laws and the rising interest rates, I doubt that I will get such a great deal on any cards!
I understand about the need to reign in the bankrupcy situation but the administration really needs to putt the rug out from the card companies also. They are just looking for ways to make it impossible to pay cards off!

Ugh! Anyway I will now call the card company but I wanted to rant here before I lost it with them!

Thanks and wish me luck!


JL

[PRICEPLUS]

Your story is a familiar one.

Call up the credit card company and very politely tell them that you are a good customer and you would like the interest rate lowered. If they will not lower your rate look for a card company that will give you a better rate and transfer your balance there. Look at many cards and whta they have to offer.

The credit card company needs you as much as you need them. Credit cards are a commodity product and Chase is charging you a premium price. The credit card company spends a lot of money to get an individual to sign up with them. The CC company does not want to lose you.

Closing old CC cards may have hurt your FICO score. It would have been better to leave some of the older accounts open. No sense crying over spilt milk now though.

Remember to call and ask for a lower rate. Look for cards with lower rates. Finally, keep older cards open to help your FICO score.

Good Luck. I have been there. Check out Bankrate.com

[34saving]

. . . Even stranger . . .if you push them they'll probably let you open a new (2nd) account with them with the 12 mo 0% financing. (One of the google ads on this very page was for Chase offering 12 mo of 0% financing, so they must still be offering it.)

I was surprised when a credit card customer service person told me: "Oh, you can have as many cards as you want with us!" They had a great intro. offer, so I got two -- and they both came with the same limit.

Good luck!!

[jhd815]

Call the cc company and ask them for their best contract rate. If you are customer in good standing and have good credit they should offer you a much better rate. The majority of cc companies have been switching their customers from fixed rates to variable rates because of the rising interest rates the bank have to pay each other for loans.

I called my cc company about three months ago and asked to be switched back to a fixed contract rate. Make sure it is a contract rate and not a promotional rate! Promotional rates expire and then they will try to put you into the highest apr category they can.

Most people wind up paying more interest than they need to (based on their credit rating) because the cc companies know that the majority of people will just accept it and not call to ask for a diffferent rate.

In fact, sadly, many people only look at the box with the minimum payment due and don't even compare their cc rates to see what they are really paying for credit.

[terry1156]

I can fully understand your frustration. Did you call the CC comapny and were you able to get the rates lowered?

[singinjeannie]

News Flash!!! Credit Card companies are snakes, and when you play with snakes you get bit. Did you know that the CC companies check up on you regularly, and if you're late on someone else's bill, they'll raise your rate??? You don't have to be late on THEIR bill, but on anyone's bill. Send the electric bill a bit late??? Oh, Chase can raise your rate! A bit late on the Mortgage LOC, Capital One is right on your rate hike! Snakes, snakes, snakes.

Now, I've no room to talk, as I have lots of outstanding credit, but am working hard to try to find a way to get them paid off.

Also -- how dumb that FICA scores go down if you close credit cards. Makes no sense financially. If you have fewer cards, you should be a better credit risk, not a greater risk! FICA makes no sense at all.

I received a note in the mail yesterday from MBNA about our credit card and a change. It was in such legaleeze [sp] that I couldn't figure out what the heck they were going to do. I've been in good standing with MBNA also.

-I'm ranting too
Good luck -- hope you get a great rate with someone else.

Jean

[neatdesign]

Originally Posted by singinjeannie

News Flash!!! Credit Card companies are snakes, and when you play with snakes you get bit. Did you know that the CC companies check up on you regularly, and if you're late on someone else's bill, they'll raise your rate??? You don't have to be late on THEIR bill, but on anyone's bill. Send the electric bill a bit late??? Oh, Chase can raise your rate! A bit late on the Mortgage LOC, Capital One is right on your rate hike! Snakes, snakes, snakes.

You're referring to what's known as "universal default". Some credit card companies have this policy, some don't. It's legal for them to do that, because it's all laid out in the fine print of their credit card offers, so that's why they can get away with it. No one seems to be asking our lawmakers why the credit card industry is allowed so much leeway in this area.

Also -- how dumb that FICA scores go down if you close credit cards. Makes no sense financially. If you have fewer cards, you should be a better credit risk, not a greater risk! FICA makes no sense at all.

The problem with the whole credit score thing is that that industry is completely unwilling to explain what makes a credit score good and what damages it. I mean, what's wrong with publishing information that says, "Hey consumers, if you want to have good credit scores you need to do X, Y and Z and quit doing A, B and C." Instead we're just all left out in the cold to sort it out for ourselves, relying on rumor and myth. It's really retarded in my book.

As for the closing accounts thing, that actually does make sense to me. It's one thing to close out accounts, but WHICH accounts? When were they opened? And what are the balances? What are the credit limits?

For instance, I have two credit card accounts. My USAA Mastercard was opened in 1991 when I entered college. It started off with a $500 limit but now is up to $13,500. That currently has a $7300 balance. My MBNA card was only opened in late 2003 and has a $7500 limit and a zero balance (I just transferred it to USAA for a lower rate).

Now, let's imagine the $7300 was actually on the MBNA card and I closed the USAA card. By closing that account, I'm eliminating my oldest account, the longevity of which is indicative of stability, plus I'm losing $13,500 in available credit. That means my $7300 balance goes from taking up 34% of my overall credit limit (more than 20% but still not too bad) to taking up 97% of my overall credit limit (VERY risky).

As it happens, I have my balance on my USAA card because I have a great rate, but even if I had no balance I would still keep the card. I've had it for 14 years -- why get rid of it now?

I received a note in the mail yesterday from MBNA about our credit card and a change. It was in such legaleeze [sp] that I couldn't figure out what the heck they were going to do. I've been in good standing with MBNA also.

I think I got that same change in terms. Luckily for me I work for a credit card company (don't hate me, it's a job!) so I can understand most of it. But I'm in the minority, I believe. Before I started working there I wouldn't have a clue about any of those notices, if I happened to read them at all.

Read through the notice again, and see if it gives you the option of opting out of the change in terms. If so, this usually involves sending in a written notice and stopping any transactions from posting after a specified date. This might be a good option for you if you're simply paying off the balance and don't intend to use the card.

~ Jenney

[singinjeannie]

Quote from Jenney: "Read through the notice again, and see if it gives you the option of opting out of the change in terms. If so, this usually involves sending in a written notice and stopping any transactions from posting after a specified date. This might be a good option for you if you're simply paying off the balance and don't intend to use the card."

Okay, it does give that option, and I'm going to write the letter. Question -- it says they can close my account at any time if I reject the change. If they close my account, will they require payment in full on the amount owed? I know I can't make that happen? Do you know?

-Jean

[neatdesign]

Originally Posted by singinjeannie

Okay, it does give [the opt-out] option, and I'm going to write the letter. Question -- it says they can close my account at any time if I reject the change. If they close my account, will they require payment in full on the amount owed? I know I can't make that happen? Do you know?

Unfortunately I don't know the answer to that. The company I work for does not close people's accounts if they opt out of a change in terms. We require an opt-out coupon to be mailed in by a specified deadline, and no new charges to post to the account after a certain date. If charges DO post after that date -- even if the opt-out coupon had already been received and the transaction took place before that date but took a few days to post -- that is considered an acceptance of the change in terms.

Be sure to check the specifics of the opt-out process. For instance, we will only accept the actual opt-out coupon that's included in the notice; a regular letter doesn't suffice. And we HAVE to get the coupon by the deadline. Every so often I'll get a customer who says, "Can't you see that I haven't made any charges to my account since the deadline? Isn't that proof that I didn't accept the change in terms?" And I always have to respond, "No, that's not sufficient proof. For instance, I never charge to my credit card, but it's not because I'm trying to avoid a change in terms, it's because I'm trying to pay down my balance and not add to it. Lots of people do that -- that's why we require the opt-out coupon."

Generally speaking, I can't see how an account can be closed if it still has a balance. As long as there's a balance, the credit card company has to continue sending you statements and processing your payments, etc., which it wouldn't do for a closed account. Whether your credit card company will require you to pay up asap or accept the change in terms, I can't say -- only they can tell you that. But I would be surprised if they'd make you pay up, at least that's what my common sense says!

~ Jenney

[do97jdl]

Hello Everyone!

I am sorry that I did not get to read and respond to all your posts and information earlier, but I do appreciate all your input! Actually I had a bit of surgery and didn't have time to read the forums! But all is well!

I did contact Chase/Bank One and was told that my rate was increased because I had used "too much of my available credit too quickly".

I had a maximum credit limit of approximately $11K when I opened the card with zero interest for one year. Naturally, I transferred a good portion of my balances from other cards to that card.

Last August, my daughter started college, and I started to use that card exclusively for her college related expenses (not tuition), especially if I needed to make car and hotel reservations, etc,
I figured that I could concentrate on paying down balances that were left on the other cards (and I had a lot to start), close some as I went along, and enjoyed the zero rate.
Which is not to say that I did not pay more than the minimum due every month to Bank One. I did, and they even increased my credit limit last August to $12,700!

Last September, my card balance was about $9,000, and from then to February, it went up to a bit over $11,000.
Most of the money spent I expected, since along with it being my daughter's first year at college, she also has diabetes, so I knew we would have the extra expenses.
However, most of that credit card use occurred from August through December or January, when my daughter was getting started and settled at school.
Since that time, I have chipped away at that balance, very slowly (because it was a great rate). I never went over my limit (not even the original credit limit), nor had late payment.

When I called them, a supervisor told me I had the option to close the account, which would freeze the rate where it was, adjusting for prime rate changes only, unless I defaulted, made a late payment etc.
So, that is what I did.
I questioned the supervisor several times about closing the account, because I had always been told that once you close an account, the card company can hike your rate to their maximum. She told me that they did not do that at Chase. I hope she is correct.
In any event there is not a lot I can do about it now, but I sure have learned a lesson very well!
I really do wish that the government would jump into the credit card company politics (fantasy, I know) and prevent them from, basically loan shark type dealings with customers!
If we have a "contract" or "agreement" with a particular card company, that they have offered to us, and we agree to when we sign up for a card, they should not be allowed to simply change that agreement, because it serves their purposes! That is just wrong!

Sorry this is long, but since I had such a long time in between posts, I felt I should fill you all in on what happened in between!

Again, thanks so much for the advice and suggestions!
Take care.

JL