GM Credit Card Change in Terms
Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 494
Posted: Thu Feb 17, 2005 8:37 pm
Post subject: New GM Card terms--is there no control of what banks can do?
I received my latest GM Card statement today. (I owe $2.77.) In it was a change of terms notice. The changes are the usual--GM is going to two-cycle billing, increasing late fees ($39 now if your balance is greater than $1,000). But what struck me is this paragraph in the new terms:
Quote:
WE MAY CHANGE OR TERMINATE ALL OR ANY PART OF THIS AGREEMENT OR ADD NEW TERMS AT ANY TIME, INCLUDING WITHOUT LIMITATION ADDING OR INCREASING FEES, INCREASING YOUR PERIODIC PAYMENT AND INCREASING THE RATE OR AMOUNT OF FINANCE CHARGE...AMONG OTHER THINGS, WE MAY UNILATERALLY INCREASE YOUR APR, INCREASE FEES OR TAKE OTHER ACTION TO INCREASE THE COST OF CREDIT BASED ON A CHANGE IN YOUR CREDIT HISTORY, INCLUDING...AN INCREASE IN YOUR TOTAL OUTSTANDING DEBT, OR AN INCREASE IN THE USE OF YOUR CREDIT LINES....UNLESS OTHERWISE STATED, CHANGES APPLY TO BOTH NEW AND OUTSTANDING BALANCES.
(I'm not shouting--the original is in all caps.)
So, let's see, all you have to do is USE a credit card--presto, your debt has gone up and GM can do anything. If you have an unused line of credit with any bank and you decide to use some of it, you're at the mercy of ANY fee, ANY interest rate, ANY demand for repayment GM chooses to make.
This is just crazy. None of us have credit limits that are real, because if we use what we think we have the banks can penalize us. And we're penalized retroactively and instantly. What sort of an agreement is it that a bank can change for little or no reason at any time? How can anyone carry a balance or even use a credit card when terms like this exist? How can anyone do any financial planning?
I'll never use that card again. Just another example of why it pays to have LOTS of credit and plenty of alternatives to go to when a bank pulls a fast one like this.
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
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Author: Nathan
Joined: 09 Apr 2004
Posts: 42
Location: Arizona
Posted: Thu Feb 17, 2005 8:52 pm
If that change of terms is in my next statement (probably will be), I'm canceling the card.
I'll post it if it is in there.
There are no stupid questions -- only stupid answers.
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Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 494
Posted: Thu Feb 17, 2005 8:59 pm
I predict it will be there, Nathan. I wasn't singled out for this--there's no mention of any credit report used for changing these terms or any mention of any credit bureau from which I could obtain a free credit report. That's required to be in the notice if it was personal.
The notice starts out with an innocuous mention that the Household Bank name will change to HSBC Bank Nevada, N. A. as of March 1. I wonder how many will read the rest of it...
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
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Author: credithelp
Joined: 23 Aug 2004
Posts: 70
Posted: Thu Feb 17, 2005 10:20 pm
I would drop that account like a hot potato.
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Author: Board Monitor
Board Monitor/ Administrator
Joined: 05 May 2003
Posts: 564
Posted: Fri Feb 18, 2005 1:18 pm
Polonius,
Thanks for the post! As I've said many times, the banks "hold all the cards".
Best Regards,
Curtis Arnold
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH
501-301-8474 FX
Last edited by Board Monitor on Sun Feb 27, 2005 10:25 am; edited 1 time in total
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Author: Nathan
Joined: 09 Apr 2004
Posts: 42
Location: Arizona
Posted: Sat Feb 26, 2005 11:16 pm
Polonius, you were right.
Interestingly enough, today my wife, my mother and I all got the notice sent by its self (folded postcard). We all have separate accounts.
Now, I said I would cancel it but I'm not 100% sure I/we should. The card has a pretty low limit (compared to some of the others I've got recently) and I just got it about a year ago ($3,500). Same for my wife ($3,000). I've asked for an increase a few times and they said no. My mother's is $7,500.
Talk about a double edge sword, even though it's not too sharp for me, it could be for someone else. By keeping it open I run the risk of getting the infamous "Closed By Credit Grantor" on my credit report, since I do use my other cards quite a bit and do run up the balances pretty high, while only sometimes paying in full. Since I found this board I've opened quite a few cards and use each one for it's own unique purpose. I try to use most of them once every 3 months or so, and from the way I read the new terms, *IF* I use a card that I haven't used in say... 12 months, violation, rate hike, possibly a closed account.
Also, most of you know that scores and balances reported to the credit bureaus change on a daily basis based on when the creditor updates them (info I've watched using PG for the past 3 months while taking notes, thanks Night!). Point is, if they do an account review on certain days, it could show $50k in debt and the next day, $5k. Again, violation.
I could use some feedback here. I would prefer to tell them to take a hike, but the account is so new, and the limit is one of the lowest I have now. Should I wait a month until it is a full year old?
Polonius, are you getting rid of yours?
Opinions anyone?
There are no stupid questions -- only stupid answers.
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Author: Verne
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 14 May 2003
Posts: 494
Location: Midwest
Posted: Sun Feb 27, 2005 10:49 am
Nathan,
I wouldn't cancel the GM card unless you are over a barrel and have a balance with them you can't move elsewhere. If you don't owe them anything the new terms can't hurt you. (unless it includes an annnual fee)Keeping this card open and preserving the available credit will help you if other card companies get cute.
My biggest balance is with GM and I can't quite move it all elsewhere. They recently raised my credit limit from $16,000 to $19,000 with great balance transfer offers and I had been thinking about moving even more of my debt over to my GM card, that is, until I read this thread.
Thanks Polonius for the warning. I will receive my GM statement within the next couple days. I'm already preparing my rejection of terms letter. Remember, for those of you who are trapped with a balance at GM that you can't move elsewhere, you must reject the new terms in writing. (within 20-30 days if not in return mail) But I always recommend trying to find a way to move the debt elsewhere and hold on to as much available credit as possible.
I'll let you know what I find in my next GM statement.
Verne
Any agreement that can be changed at any time, for any reason, is no agreement at all.
View our latest credit card ratings!
Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 494
Posted: Sun Feb 27, 2005 11:23 am
I'm keeping my GM card. My reasons? I've had the card for more than 10 years; I don't carry a balance on it; by keeping it open, I might get one of those good balance transfer offers Verne mentions. There is no annual fee, so there's really no downside except for the fact that it adds to my credit availability and reduces my chances of getting additional cards or credit line increases from other cards, since the banks are worried that I might be asking for those new cards or CLIs so I can run up my balances to an incredible amount.
There are two keys here.
1) Grab those balance transfer offers when available. That prevents the banks from reducing your credit limit below your current balance.
2) Be prepared to handle the debt by other means--don't be locked into a card. In other words, if you owe money and get put into the default rate category (20% or higher), you better be able to pay off that card with cheaper funds from somewhere. I've got a whole bunch of cards with interest rates of 13%-18% which I don't use much at all, but which I'm hanging on to for a rainy day.
It's an everchanging world out there. I've mentioned here that I had 6 Chase cards. I used those for fee-free grace period balance transfers and basically transferred every other month for years to take advantage of that. Late last year Chase put a (maximum) $75 fee on each balance transfer.
So I called Chase and told it to combine 3 of the lower-limit cards into the 4th. That way, instead of doing 4 balance transfers on 4 cards ($300 fee), I'll just do one on one card for a $75 fee. I now have a $45,500 limit on that fourth card (as well as $23,000 and $14,500 on the other two). Believe me, if I get a good balance transfer offer I'll use it--thus locking in the credit line. After all, Chase could decide to reduce the $45,500 limit at any time if it's not being used. Because I have a HELOC with credit available at prime less .25% (5.25% is the net rate to me today), I'm only going for balance transfers under 5%. Got one of those on my Sears MasterCard this week--5.99% until paid, but 1.99% through the end of July. So I'll charge $10,000 to that using the 1.99% check and pay off my HELOC in part. Result is I'll be paying 2% interest instead of 5.25% interest on $10,000 for about 5 months. That's about $150 bucks in interest saved, roughly--and I'll just pay it all off with a HELOC check at the end.
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
View our latest credit card ratings!
Author: Verne
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 14 May 2003
Posts: 494
Location: Midwest
Posted: Sun Feb 27, 2005 9:19 pm
I received a change in terms for my GM card in May 2003 that included a minimum payment of 2.5% of the balance rather than the previous 2% and the following:
"We may change or terminate all or any part of this agreement or add new terms at any time, including without limitation adding or increasing fees, increasing you periodic payment and increasing the rate or amount of finance charge, or changing the method of computing the balance upon which finance charges are assessed. Written notice will be provided to you when required by applicable law."
It doesn't go into as much detail as the one Nathan and Polonius just received but it seems to suggest they can do whatever they want. Why do they even bother giving reasons since they also say they can change the terms at any time for any reason?
At the time I had more available credit so I rode out the change in terms figuring I could move my balance elsewhere if GM jacked my rates. Since then GM has increased my credit limit several times (from about $12,000 to $19,000), offered me 0% to 4.9% BT's with no fees and left the rate alone.
I've always been cautious with GM since it's Household Bank. I never use much more than 60% of my credit limit and pay at least 4%-5% of my balance or about double the minimum - even if it means paying less on higher-interest cards. This approach makes no financial sense but my rates aren't jacked. My way of letting sleeping dogs lie.
I think I will ride out the current change in terms (if I get it) and keep doing what I'm doing - going nowhere fast.
Verne
Any agreement that can be changed at any time, for any reason, is no agreement at all.
Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 494
Posted: Mon Feb 28, 2005 10:36 am
Quote:
Why do they even bother giving reasons since they also say they can change the terms at any time for any reason?
Because if the terms change because of something on your particular credit report, federal law requires that you be told that and be given a free copy of that report by the credit bureau that the card issuer used to make that decision.
If the card issuer changes terms overall for everyone with a particular kind of card (as GM/Household just did), it doesn't have to cite anything specifically or give any reasons.
Last year my GM card had an $11,000 limit. I got a letter last summer from Household/GM reducing my limit to $7305.00 and raising my interest rate for purchases and cash advances. I had a balance transfer with $7100.00 outstanding at that time at a low interest rate. (I purposely kept it under 70% of the limit.) That rate didn't change. I just paid it off as planned and have never used the card again.
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
View our latest credit card ratings!
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 494
Posted: Thu Feb 17, 2005 8:37 pm
Post subject: New GM Card terms--is there no control of what banks can do?
I received my latest GM Card statement today. (I owe $2.77.) In it was a change of terms notice. The changes are the usual--GM is going to two-cycle billing, increasing late fees ($39 now if your balance is greater than $1,000). But what struck me is this paragraph in the new terms:
Quote:
WE MAY CHANGE OR TERMINATE ALL OR ANY PART OF THIS AGREEMENT OR ADD NEW TERMS AT ANY TIME, INCLUDING WITHOUT LIMITATION ADDING OR INCREASING FEES, INCREASING YOUR PERIODIC PAYMENT AND INCREASING THE RATE OR AMOUNT OF FINANCE CHARGE...AMONG OTHER THINGS, WE MAY UNILATERALLY INCREASE YOUR APR, INCREASE FEES OR TAKE OTHER ACTION TO INCREASE THE COST OF CREDIT BASED ON A CHANGE IN YOUR CREDIT HISTORY, INCLUDING...AN INCREASE IN YOUR TOTAL OUTSTANDING DEBT, OR AN INCREASE IN THE USE OF YOUR CREDIT LINES....UNLESS OTHERWISE STATED, CHANGES APPLY TO BOTH NEW AND OUTSTANDING BALANCES.
(I'm not shouting--the original is in all caps.)
So, let's see, all you have to do is USE a credit card--presto, your debt has gone up and GM can do anything. If you have an unused line of credit with any bank and you decide to use some of it, you're at the mercy of ANY fee, ANY interest rate, ANY demand for repayment GM chooses to make.
This is just crazy. None of us have credit limits that are real, because if we use what we think we have the banks can penalize us. And we're penalized retroactively and instantly. What sort of an agreement is it that a bank can change for little or no reason at any time? How can anyone carry a balance or even use a credit card when terms like this exist? How can anyone do any financial planning?
I'll never use that card again. Just another example of why it pays to have LOTS of credit and plenty of alternatives to go to when a bank pulls a fast one like this.
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
View our latest credit card ratings!
Author: Nathan
Joined: 09 Apr 2004
Posts: 42
Location: Arizona
Posted: Thu Feb 17, 2005 8:52 pm
If that change of terms is in my next statement (probably will be), I'm canceling the card.
I'll post it if it is in there.
There are no stupid questions -- only stupid answers.
View our latest credit card ratings!
Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 494
Posted: Thu Feb 17, 2005 8:59 pm
I predict it will be there, Nathan. I wasn't singled out for this--there's no mention of any credit report used for changing these terms or any mention of any credit bureau from which I could obtain a free credit report. That's required to be in the notice if it was personal.
The notice starts out with an innocuous mention that the Household Bank name will change to HSBC Bank Nevada, N. A. as of March 1. I wonder how many will read the rest of it...
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
View our latest credit card ratings!
Author: credithelp
Joined: 23 Aug 2004
Posts: 70
Posted: Thu Feb 17, 2005 10:20 pm
I would drop that account like a hot potato.
View our latest credit card ratings!
Author: Board Monitor
Board Monitor/ Administrator
Joined: 05 May 2003
Posts: 564
Posted: Fri Feb 18, 2005 1:18 pm
Polonius,
Thanks for the post! As I've said many times, the banks "hold all the cards".
Best Regards,
Curtis Arnold
Board Monitor
U.S. Citizens for Fair Credit Card Terms, Inc.
http://www.cardratings.com
501-663-0314 PH
501-301-8474 FX
Last edited by Board Monitor on Sun Feb 27, 2005 10:25 am; edited 1 time in total
View our latest credit card ratings!
Author: Nathan
Joined: 09 Apr 2004
Posts: 42
Location: Arizona
Posted: Sat Feb 26, 2005 11:16 pm
Polonius, you were right.
Interestingly enough, today my wife, my mother and I all got the notice sent by its self (folded postcard). We all have separate accounts.
Now, I said I would cancel it but I'm not 100% sure I/we should. The card has a pretty low limit (compared to some of the others I've got recently) and I just got it about a year ago ($3,500). Same for my wife ($3,000). I've asked for an increase a few times and they said no. My mother's is $7,500.
Talk about a double edge sword, even though it's not too sharp for me, it could be for someone else. By keeping it open I run the risk of getting the infamous "Closed By Credit Grantor" on my credit report, since I do use my other cards quite a bit and do run up the balances pretty high, while only sometimes paying in full. Since I found this board I've opened quite a few cards and use each one for it's own unique purpose. I try to use most of them once every 3 months or so, and from the way I read the new terms, *IF* I use a card that I haven't used in say... 12 months, violation, rate hike, possibly a closed account.
Also, most of you know that scores and balances reported to the credit bureaus change on a daily basis based on when the creditor updates them (info I've watched using PG for the past 3 months while taking notes, thanks Night!). Point is, if they do an account review on certain days, it could show $50k in debt and the next day, $5k. Again, violation.
I could use some feedback here. I would prefer to tell them to take a hike, but the account is so new, and the limit is one of the lowest I have now. Should I wait a month until it is a full year old?
Polonius, are you getting rid of yours?
Opinions anyone?
There are no stupid questions -- only stupid answers.
View our latest credit card ratings!
Author: Verne
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 14 May 2003
Posts: 494
Location: Midwest
Posted: Sun Feb 27, 2005 10:49 am
Nathan,
I wouldn't cancel the GM card unless you are over a barrel and have a balance with them you can't move elsewhere. If you don't owe them anything the new terms can't hurt you. (unless it includes an annnual fee)Keeping this card open and preserving the available credit will help you if other card companies get cute.
My biggest balance is with GM and I can't quite move it all elsewhere. They recently raised my credit limit from $16,000 to $19,000 with great balance transfer offers and I had been thinking about moving even more of my debt over to my GM card, that is, until I read this thread.
Thanks Polonius for the warning. I will receive my GM statement within the next couple days. I'm already preparing my rejection of terms letter. Remember, for those of you who are trapped with a balance at GM that you can't move elsewhere, you must reject the new terms in writing. (within 20-30 days if not in return mail) But I always recommend trying to find a way to move the debt elsewhere and hold on to as much available credit as possible.
I'll let you know what I find in my next GM statement.
Verne
Any agreement that can be changed at any time, for any reason, is no agreement at all.
View our latest credit card ratings!
Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 494
Posted: Sun Feb 27, 2005 11:23 am
I'm keeping my GM card. My reasons? I've had the card for more than 10 years; I don't carry a balance on it; by keeping it open, I might get one of those good balance transfer offers Verne mentions. There is no annual fee, so there's really no downside except for the fact that it adds to my credit availability and reduces my chances of getting additional cards or credit line increases from other cards, since the banks are worried that I might be asking for those new cards or CLIs so I can run up my balances to an incredible amount.
There are two keys here.
1) Grab those balance transfer offers when available. That prevents the banks from reducing your credit limit below your current balance.
2) Be prepared to handle the debt by other means--don't be locked into a card. In other words, if you owe money and get put into the default rate category (20% or higher), you better be able to pay off that card with cheaper funds from somewhere. I've got a whole bunch of cards with interest rates of 13%-18% which I don't use much at all, but which I'm hanging on to for a rainy day.
It's an everchanging world out there. I've mentioned here that I had 6 Chase cards. I used those for fee-free grace period balance transfers and basically transferred every other month for years to take advantage of that. Late last year Chase put a (maximum) $75 fee on each balance transfer.
So I called Chase and told it to combine 3 of the lower-limit cards into the 4th. That way, instead of doing 4 balance transfers on 4 cards ($300 fee), I'll just do one on one card for a $75 fee. I now have a $45,500 limit on that fourth card (as well as $23,000 and $14,500 on the other two). Believe me, if I get a good balance transfer offer I'll use it--thus locking in the credit line. After all, Chase could decide to reduce the $45,500 limit at any time if it's not being used. Because I have a HELOC with credit available at prime less .25% (5.25% is the net rate to me today), I'm only going for balance transfers under 5%. Got one of those on my Sears MasterCard this week--5.99% until paid, but 1.99% through the end of July. So I'll charge $10,000 to that using the 1.99% check and pay off my HELOC in part. Result is I'll be paying 2% interest instead of 5.25% interest on $10,000 for about 5 months. That's about $150 bucks in interest saved, roughly--and I'll just pay it all off with a HELOC check at the end.
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
View our latest credit card ratings!
Author: Verne
SENIOR MEMBER (Member for 2 yrs.+)
Joined: 14 May 2003
Posts: 494
Location: Midwest
Posted: Sun Feb 27, 2005 9:19 pm
I received a change in terms for my GM card in May 2003 that included a minimum payment of 2.5% of the balance rather than the previous 2% and the following:
"We may change or terminate all or any part of this agreement or add new terms at any time, including without limitation adding or increasing fees, increasing you periodic payment and increasing the rate or amount of finance charge, or changing the method of computing the balance upon which finance charges are assessed. Written notice will be provided to you when required by applicable law."
It doesn't go into as much detail as the one Nathan and Polonius just received but it seems to suggest they can do whatever they want. Why do they even bother giving reasons since they also say they can change the terms at any time for any reason?
At the time I had more available credit so I rode out the change in terms figuring I could move my balance elsewhere if GM jacked my rates. Since then GM has increased my credit limit several times (from about $12,000 to $19,000), offered me 0% to 4.9% BT's with no fees and left the rate alone.
I've always been cautious with GM since it's Household Bank. I never use much more than 60% of my credit limit and pay at least 4%-5% of my balance or about double the minimum - even if it means paying less on higher-interest cards. This approach makes no financial sense but my rates aren't jacked. My way of letting sleeping dogs lie.
I think I will ride out the current change in terms (if I get it) and keep doing what I'm doing - going nowhere fast.
Verne
Any agreement that can be changed at any time, for any reason, is no agreement at all.
Author: Polonius
Credit Expert (100+ Posts)
Joined: 19 Jan 2004
Posts: 494
Posted: Mon Feb 28, 2005 10:36 am
Quote:
Why do they even bother giving reasons since they also say they can change the terms at any time for any reason?
Because if the terms change because of something on your particular credit report, federal law requires that you be told that and be given a free copy of that report by the credit bureau that the card issuer used to make that decision.
If the card issuer changes terms overall for everyone with a particular kind of card (as GM/Household just did), it doesn't have to cite anything specifically or give any reasons.
Last year my GM card had an $11,000 limit. I got a letter last summer from Household/GM reducing my limit to $7305.00 and raising my interest rate for purchases and cash advances. I had a balance transfer with $7100.00 outstanding at that time at a low interest rate. (I purposely kept it under 70% of the limit.) That rate didn't change. I just paid it off as planned and have never used the card again.
Polonius
"Neither a borrower, nor a lender be; For loan oft loses both itself and friend"
View our latest credit card ratings!
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