Credit Tips: Credit Card Interest Rate Hike

Posted On: January 1, 2005

Author: agalya
Joined: 22 Jun 2004
Posts: 3
Posted: Tue Jun 22, 2004 12:20 pm
Post subject: credit in times of need

The last four years have been a difficult but steady path to reducing credit card debt, due to a bad turn in a twenty+ year business, which ended in (corporate) bankruptcy at the end of 2003. Our household was dependent on the missing salary, and I went to work at the corporate level for a few months. When a better offer came to me, I took it and gave two weeks notice. My former employer stuck me with a $3000 payroll deficit, which is now in litigation with the labor board. In the meantime, my new employer is holding back one month’s pay ($4000), with my first influx of money on the 13th of next month. I have one credit card for emergency use, which (through all the downturns, has just about been maxed out at about $5800. The payments on it, however, have always been on time and more than the minimum. I just received a notice on that card, that it is going up in interest % due to our credit rating (750). The cash flow for the household is completely dried up (paying down the residual business debt that was in my personal name), and I desperately need to fund the next few weeks until the bottleneck opens up (I also have a $10,000 IRS refund pending). Do you suggest card shopping? Transferring balance? Which card/program would look upon me favorably?

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Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 358
Posted: Tue Jun 22, 2004 12:46 pm

Read the fine print of the letter sent to you raising your interest rate. Typically, there’s an option somewhere saying that if you can refuse to accept the change in terms with written notice. When that notice is received, your card will be cancelled–but you can continue to pay it off at the original rate as you originally agreed. If you USE the card again, that’s regarded as accepting the new conditions. As for your other questions, I’ll let those more knowledgeable than I reply. Frankly, 750 is regarded as a pretty good credit score and additional credit should be forthcoming easily, probably at a lower rate than you’re paying now. But applying for credit cards when you’re in a bind like this is not a good idea in general. When you get that tax refund and get out of the bind–THAT will be the time to apply for additional credit.

Polonius
“Neither a borrower, nor a lender be; For loan oft loses both itself and friend”

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Author: agalya
Joined: 22 Jun 2004
Posts: 3
Posted: Tue Jun 22, 2004 1:12 pm
Post subject: using credit in emergencies

thank you for your input, unfortunately, the clause you mentioned does not appear on this particular piece of mail. I will try to call the office and (get a human!) try to plead that case. Ideally, I agree with your observation: to wait until the refund comes and then shop for a card. I don’t have time on my side, however, and unless I can tap some cash somewhere, I can look forward to making delayed payments (inclusive of credit card, mortgage and college loans), and possibly…have utilities shut off.

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Author: agalya
Joined: 22 Jun 2004
Posts: 3
Posted: Tue Jun 22, 2004 1:19 pm

additional info on the card: I just contacted the bank who holds this card, and gave them the information as you stated, to see if they would honor the previous rate should I decide to decline its use. I was told that that does not apply. Also, when pressed, I was told that the rate went into effect the SAME day the letter went out to me! Unbelievable!

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Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 358
Posted: Tue Jun 22, 2004 10:58 pm

Bummer. Usually rates don’t jump like that unless you fail to make the minimum payment on time; the way the rate is calculated is part of your contract when you get the card, and I’ve never seen a card that can just willy-nilly change the rate on you because of your credit score and apply it to money advanced at the old rate. I have seen minimum payments accelerated when the card issuer gets nervous, and rates frequently go up to larcenous levels if you are a day late or don’t make the minimum payment on time. Rates do change all the time–but the way they change are determined by the terms you and the bank agreed to when the card was issued. (X% above prime, for example.) Have you tried getting an advance on the tax refund you’re due? Some banks/finance companies will advance the refund amount for a fee for most sorts of federal tax refunds.

Polonius
“Neither a borrower, nor a lender be; For loan oft loses both itself and friend”

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Credit Tips: Credit Card Interest Rate Hike

Posted On:

Author: racingjay
Joined: 08 Sep 2004
Posts: 1
Posted: Wed Sep 08, 2004 7:04 pm
Post subject: Another Chase Question

My question is very similar to the previous one about Chase. In June, apparently they informed me that my interest rate was being raised. Being an online custumore, the disclosure was not provided online, rather was mailed to me, and probably tossed with the thousands of other propaganda pieces I receive. I have been a chase customer since 1999, and carry a good sized balance on their card. My credit score is a 725, and I have a few other cards. I make good income, and have never missed a payment. My interest rate was jacked from 5.49% to 23.49%. The reason I was told was high other balances and new accounts. I was told that the accounts were reveiwed every 30 days. However, my balances are currently $5,000 less than this time last year. I have opened one new account. I protested the idea, and went up the chain of command through two supervisors, each could only tell me to obtain my cbr and write to the general correspondence address. Does anyone have any thoughts/ideas/suggestions on this matter, or have sucessfully been through this situation?

Thanks in advance!

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Author: Verne
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 14 May 2003
Posts: 488
Location: Midwest
Posted: Wed Sep 08, 2004 9:17 pm

This happened to me with Chase (twice) but I caught it and closed the account after I received the notice (also twice). My credit usage was nearly 100% back then so I had nowhere to move the balance and had to close the account to freeze the terms. Since the notice of the change in terms is deliberately meant to be overlooked - a tiny slip of paper amongst the junk inserts with the statement, you could make a case that you weren’t notified. They count on most people not seeing the change in terms notice or reading the fine print in the first place - which is the finest type allowed by law. (get your reading glasses out) Chase and other card companies only jack the rates when they know you can’t move the balance elsewhere. They examine your credit report, analyze it every which way but Sunday, and jack the rates when they think you are trapped. Of course this behavior shouldn’t be legal and I would report them to your attorney general, the banking regulators, and your senators and state reps. An agreement with a credit card company means nothing.

Verne

Any agreement that can be changed at any time, for any reason, is no agreement at all.

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