Credit cards again

[Ed62]

We have one from Capitol One, and we use it on occasion. Since the balance is always very low, I don't mind paying a small interest rate for something we find a good deal on. Even with a low interest rate, it gets paid off quickly, never staying on the books.

Today we received a notice that our interest rate would go up to 13.5% beginning in January. We now have 5.5%. My wife called them, telling them they had to reverse the policy, or we would pay it off and cancel our card. She was told they couldn't do anything about it. This came from an outsourced job, probably to India. She made it clear that we were not going to pay more just because some other people are not paying the way they should. Looks like they lost a good customer who won't pay because of their giving credit to customers who probably don't deserve it.

I read a little about the new bill that passed and will become law shortly. If I read it correctly, it said that if a credit card company uses somebody's poor credit to raise interest rates, they also have to lower the interest rates for those with good credit. Sure seems like we should have gotten a reduction in rates. Rant over.

Ed

[crokett]

The law isn't a law until the President signs it and to my knowledge he hasn't yet. When he does I believe there is still a grace period before it comes into effect. Also, before the CC company can raise rates on a deadbeat the account has to be in arrears for at least 60 days and after 6 months of ontime payments the CC Co has to lower the rate back to the original one. So in part what they are doing is raising everybody's rate so they get rid of folks like you that they don't make much money on and after the law takes effect that base rate is higher for the deadbeats they still have.

That said, I am waiting for Chase to raise my rate, at which point I will cancel the card.

[cgallery]

Sure seems like we should have gotten a reduction in rates. Rant over.

Ed

Lower than 5.5?

I have friends that are getting quoted 7% on their commercial real estate refis.

[Ed62]

The law isn't a law until the President signs it and to my knowledge he hasn't yet.

That's correct. It seems like they're trying to raise the rates before the law goes into effect. You'll be getting yours soon.

Ed

[JR]

A short video report on topic from CNBC can be found here http://www.cnbc.com/id/30869778/

JR

[jziegler]

That said, I am waiting for Chase to raise my rate, at which point I will cancel the card.

Expect it sometime soon. I just got notice from Discover that my rate is going up. I pay off all of my cards each month, only using them for convenience and bonuses. I occasionally mess up and pay a day late and get hit with a fee. Well, Discover will be losing my business after this. Especially since they seriously degraded their cash back program a few months ago.

[jackellis]

We always pay off our balances. Because we do, we're going to be paying an annual fee for our cards pretty soon. We need at least one credit card apiece so we'll eat the cost, which is unlikely to be more than $25 per year.

In some ways, I think the credit card companies are run by complete idiots. Instead of growing earnings by trying to grow accounts and take on bad credits in the process, why not focus on good credits and minimize loan losses? Run a bank like a bank.

[crokett]

The CC companies are going where the money is. For right now that is the folks who are trapped and have no choice but to pay the higher rates. The companies all have multiple products and multiple revenue streams so for instance if you drop BofA's CC card, and just start using your debit card they could institute a small fee per use of the debit card. That is a for instance, but I would not be surprised to see it happen. Another for instance would be a lower interest rate CC but you get hit with an annual fee.

[Uncle Cracker]

I got the same notice yesterday from Cap One. I paid the account off immediately and closed it. They will never get one red cent from me again. Hope that's what they were looking for... What's in my wallet? Any card except a Cap One card...

[billwmeyer]

I believe the President will sign the bill today, and the law takes effect in February. I agree that we will all get rate hikes once or twice between now and then.

Bill

[alpha]

Believe me, I am no fan of credit card companies. But let me see if I understand this correctly. Some people with good credit have low interest rates while others with bad credit have high interest rates. If you miss a payment your rate gets jacked up.

Congress passes a law which says there has to be a grace period before jacking up the interest rate. We all know "basically" how intest is determined, (rate x money x time). So the Credit card's profit margin will shrink as a result of the reduction of "time."

How can the credit card company recover the shrinkage of their profit margin? Do you really expect them to "eat" the loss of revenue? Any reasonable person realizes WHY the credit card companies are raising their rates, but why is the anger always directed to them. They did not initiate the change in the way they do business. It was regulated.

[Russianwolf]

There is probably a reason that I haven't had a personal credit card in 15 years.

[Uncle Cracker]

How can the credit card company recover the shrinkage of their profit margin? Do you really expect them to "eat" the loss of revenue?

Why not? They expect us to "eat" the increased interest, even on those items already purchased under a prior arrangement at a prior rate... How much revenue is the CC company gonna get from me if they chase me away and I don't use their card? Think about it...

[Shep]

I recently got a note from Discover that they are now moving up my payment due date to the 27th of every month instead of the normal 1st of every month. I pay off any ballance every month, so it's not a problem; however, now I'm worried that I'll forget about the new due date and miss a payment. I think that's how they're trying to get me. Once I screw up they can jack my rate.

[BerniePA]

Believe me, I am no fan of credit card companies. But let me see if I understand this correctly. Some people with good credit have low interest rates while others with bad credit have high interest rates. If you miss a payment your rate gets jacked up.

I don't believe you do understand the problem correctly. What is happening is that the banks are raising the rates of people with GOOD credit into the realm of 20 - 24 % or even higher just because they can and they want to gouge the consumer for all they can squeeze out of him. Plus the fact that if you do miss a payment by even a couple of days, say you were on vacation, even though you have had years of on time payments, you can go into even HIGHER rates for that missed payment. This is why laws are about to be signed to make this illegal and still, since they will not be effective immediately (for why -- I don't know!!), they are intent on continuing on their soon to be illegal course of action instead of doing the right thing and stopping it now.

Certainly, someone with poor credit should have a higher rate than someone with good credit, but what they are doing is wrong. It wasn't so long ago that rates like they are charging on a daily, usual course of business wasn't called banking, it was called LOAN SHARKING!!!