Credit Card Interest Rate Jump

[Lindsay J]

OklahomaWhat is the name of your state?

I noticed on my Dec 2004 credit card statement that my interest rate had jumped way up. When I called customer service to find out why, I was told that it was because "I had had several late pays on an account with another company & was now considered an ADVERSE CREDIT RISK". I asked when the rate had been bumped & was told that they sent me a letter in Nov. 2004 to inform me that my rate was going to go to a variable rate. I told them that I had never recieved such a notice. They sent me one dated 1/6/05. I contacted the credit bureau services & ordered all 3 of my credit reports.
The account in question is an educational loan which I cosigned with my son. He has made a late payment about once a year in the last 5 years.
I also found out that they raised my rate in Aug. of 2004. I was never notified of the increase at that time. The rate being charged exceeds the 21% allowable under Oklahoma Law.

I have had this credit card for 2 years with no late pays(in fact I pay by e-mail & pay them 14 days before the due date. I have also had a car loan with their bank for 4.5 years with no late pays. My credit history shows no late pays on any of my acounts.
Is there a distinction between being a cosigner on a note & being a joint account holder on a note. They say I am a joint account holder on the educational loan & as such I am also guilt of late pays when my son pays late.
What remidies do I have to try to get them to place me back at the regular rate?

 

[Ladynred]

You don't have much chance at all. You can try what they call a 'good will' lettter, some people have some luck with it. Since you co-signed the loan, you are equally liable for the loan and your son's flubs will show on your credit reports.

ALL of the credit cards these days are rate-jacking if there are any lates or goofs with ANY other creditor. Its a money-raking scheme and its legal. Its a way for them rate-jack people to make MORE money in interest and fees, so they have little incentive to be nice, regardless of your spotless history with them.

 

[efflandt]

State interest rate limits do not apply for credit cards issued from outside of your state, which is why they are headquartered in states that have little or no control at all. They can raise your rates for any reason, even unrelated to accounts with them.

I have 2 cards with the same bank. Interest rate on one has gradually increased over 11%, and the other has rolled up over 19%. The latter may have increased so they could still get over 11% effective return after I used a teaser check. Fortunately, I just got a bonus that paid them both off.

 

[Lindsay J]

Reply to post to my original questions.

I guess what disturbs me the most about the actions of the credit card company is that I was not notified beforehand of their planned increase in rates nor was I given the opportunity to pay the accoun off in full at the lowered rate. My wife & I have credit cards with 4 other companies and now I am concerned that they too may jump on this bandwagon. I am now paying them off as fast as I can!!!!!!
My future concern is if I wish to buy a new house and have no credit accounts for the leanders to look at, how is my new credit going to be established?
Lindsay J.

 

[efflandt]

My future concern is if I wish to buy a new house and have no credit accounts for the leanders to look at, how is my new credit going to be established?

I recently read that dumping all your old credit cards for one new one may be worse for your credit score than keeping at least some of the old cards and using them wisely. If you dump all the old cards for one new card, your good history disappears, and your new card has no history.

Also percentage of debt to credit can make a difference in your score. For example having $10k credit and $2k in debt, looks better than having only a single card with $2k limit that is max'd out.

 

[nolaET]

FYI....bankrate.com had an article about rate jumping in late December/early January. The article mentioned that cc companies were going to do this in the beginning of the year and I think they outlined the reasons (unfortunately, soulless, evil *******s was not a reason). I'm not sure if they archive their articles but it might be worth a look. One thing that they recommended (which actually worked for me) is to threaten to dump them if they won't reduce the interest rate. They actually have the wording listed that you should use when you call. If you search around in their "debt" area, you should find this.

 

[IrishLady47]

I guess what disturbs me the most about the actions of the credit card company is that I was not notified beforehand of their planned increase in rates nor was I given the opportunity to pay the accoun off in full at the lowered rate. My wife & I have credit cards with 4 other companies and now I am concerned that they too may jump on this bandwagon. I am now paying them off as fast as I can!!!!!!
My future concern is if I wish to buy a new house and have no credit accounts for the leanders to look at, how is my new credit going to be established?
Lindsay J.

You're on the right track, pay off your credit cards as fast as you can. Then, don't close the account, just pay the charged amount in full each month. You retain a good credit, with history. And, if you pay in full each month, who cares what interest rate they charge. In fact, do this for several years & you will get offers all the time for credit cards with low rates. And, will be offered a better mortgage rate w/o all that unsecured debt. The only times I haven't paid a credit card in full is when I had an emergency expense (example-car repair, not gotta have that dress!). It will be hard, but dig yourself out of that financial hole. And, carrying credit card balances will always keep you in that hole.

 

[Lindsay J]

Credit Car5d Rate Hike

Patience is a Golden Virtue. I learned during my 20+ years in the Insurance business to document, document, document! I have been doing some research on the internet regarding my rate hike jump by a credit card company. I have saved all of my statements for the year, including their attachments. I have also recieved all 3 of my credit card reports & asked for 2 FICO scores.
I wrote letters to the Credit Reporting Agencies, as well as the Company who reported my son's late pay on his school loan ( which I cosigned).
I documented my conversations with the RUDE!!!! customer service reps I orginally spoke to about this matter. I sent a certified letter to the credit card company requesting their cardholder agreement ( it only took 3 weeks to get it) and how they decide to place a person on non-prefferred rates.
To my surprise, they admitted that they did not send me a notice that they were going to raise my rates. The 3 things they told me to do to maintain my preferred customer pricing ( what --at 27%) are things I have done all along.
I found a site on the internet where the New York State Attorney Generals Office has filed a class action lawsuit (2/7/05) against this cc company for the very things I am complaining about.
I have documented several errors between their customer service reps, the credit reports the cc compny used to jump my rate ( reports were only ordered 4 months after they raised my rate. They could not have been aware of my son's late pay when they raised my rate. Just about have all I need to sue! Stay tuned. Goliath is about to take on the Bear!

 

[TheSeeker]

There was a very interesting report on this by Frontline on PBS recently. If you go to frontline.org and look for the archived report on "The Secret History of the Credit Card" you will find it extremely educational on this very topic. What the credit card company has done is invoke a "universal default" clause that allows them to render you in default of your credit card agreement simply for an increase in your FICO score. You can call to negotiate a lower rate, by threatening to go to a competitor, and it may result in a compromise.

They are also putting mandatory arbitration clauses, which take away constitutional rights to a fair trail, if you have a legal dispute. They also have put language in their agreements that state the parties agree that the credit card holder waives all rights to sue in any and all situations, including class actions suits. They are able to make changes to the agreement at any time for any reason, with 15 days notice. Keeping your account open is tacit agreement to the change. Changes are usually retroactive.

However, this is something that should be illegal by fair business practices. It isn't because the banks have thousands of attorneys that have carefully crafted the credit card agreements to take away all fairness, and still be legal. Best to close your account, and stop using credit cards altogether. Watch the videos, and read the articles and interviews on Frontline. You'll want to immediately pay off your cards and close your accounts, because you will recognize you are being robbed of your money and your civil liberties.

 

[Ladynred]

The Frontline program was VERY good, I watched it. When a Harvard Law Professor says even she couldn't make sense of all the crap in a credit card agreement, we consumers have NO chance at it.

I would definitely go thru that show on the web, its very enlightening.. and frightening.

 

[DGO1223]

Patience is a Golden Virtue. I learned during my 20+ years in the Insurance business to document, document, document! I have been doing some research on the internet regarding my rate hike jump by a credit card company. I have saved all of my statements for the year, including their attachments. I have also recieved all 3 of my credit card reports & asked for 2 FICO scores.
I wrote letters to the Credit Reporting Agencies, as well as the Company who reported my son's late pay on his school loan ( which I cosigned).
I documented my conversations with the RUDE!!!! customer service reps I orginally spoke to about this matter. I sent a certified letter to the credit card company requesting their cardholder agreement ( it only took 3 weeks to get it) and how they decide to place a person on non-prefferred rates.
To my surprise, they admitted that they did not send me a notice that they were going to raise my rates. The 3 things they told me to do to maintain my preferred customer pricing ( what --at 27%) are things I have done all along.
I found a site on the internet where the New York State Attorney Generals Office has filed a class action lawsuit (2/7/05) against this cc company for the very things I am complaining about.
I have documented several errors between their customer service reps, the credit reports the cc compny used to jump my rate ( reports were only ordered 4 months after they raised my rate. They could not have been aware of my son's late pay when they raised my rate. Just about have all I need to sue! Stay tuned. Goliath is about to take on the Bear!

Good for you!!! I say go for it! We need more like you on the consumer's side.

 

[Tayla]

Most credit cards carry the universal default clause. A Creditor can "AT WILL" place this into effect. Its in the terms and conditions of the card holder policy.
On what grounds would a suit be based on, in reference to the original posters situation ? Did the creditor have a written terminolgy that stated : "Creditor will notify card holder (In writing) in X amount of days if the default rate will be implemented" Otherwise I dont see a case here to be founded upon...

 

[Lindsay J]

On p. 5, sec 23 of their cardholder agreement it states that" We will notify you of any such changes as required by law." On p. 12, sec. 4 they state that "on a monthly review we may change your rate and impose a nonpreferred rate."

Oklahoma State Law regarding credit cards states that the credit card company " will privide 2 weeks notice in writing before a company can change a consumer's rate to nonpreferred"

I am currently researching the Fair Credit Act ? provisions regarding this matter also.

If you are interested in the New York State Attorney General's suit go to
http://www.indiapost.com/members/story.php?story

I feel my case fits into their reasoning.

The other thing I am basing my case on is the discrepencies between
what 2 customer service reps have told me, dates on my credit report showing they ordered my credit report after they had raised my rates, and the date my son's late pay was turned over to the credit bureau.

 

[Tayla]

OklahomaWhat is the name of your state?

I noticed on my Dec 2004 credit card statement that my interest rate had jumped way up. When I called customer service to find out why, I was told that it was because "I had had several late pays on an account with another company & was now considered an ADVERSE CREDIT RISK". I asked when the rate had been bumped & was told that they sent me a letter in Nov. 2004 to inform me that my rate was going to go to a variable rate. I told them that I had never recieved such a notice. They sent me one dated 1/6/05. I contacted the credit bureau services & ordered all 3 of my credit reports.
The account in question is an educational loan which I cosigned with my son. He has made a late payment about once a year in the last 5 years.
I also found out that they raised my rate in Aug. of 2004. I was never notified of the increase at that time. The rate being charged exceeds the 21% allowable under Oklahoma Law.

I have had this credit card for 2 years with no late pays(in fact I pay by e-mail & pay them 14 days before the due date. I have also had a car loan with their bank for 4.5 years with no late pays. My credit history shows no late pays on any of my acounts.
Is there a distinction between being a cosigner on a note & being a joint account holder on a note. They say I am a joint account holder on the educational loan & as such I am also guilt of late pays when my son pays late.
What remidies do I have to try to get them to place me back at the regular rate?

Sounds like you are doing some educational research.! May I suggest perusing the site called : www.creditboards.com. It has a specific area dedicated to the federal regulations involving credit reporting and furnishing information. I do caution though that often times a Creditor will base its Corporate office in state that has the laws on it side. Example: South Dakota and Deleware. Thus why Citibank and MBNA are headquartered there. It works in there favor no matter where the cardholder lives. Since a credit card doesnt fall under certain banking laws they are not imposed with an interest cap rate....

Also:A Tradeline furnisher may review an active members credit report at will. They recieved your permission to pull your file once you are an active card member. THey have the right to review your file and make changes based on the information on it. Thus why its always good to review your credit file for inaccuracies or fraudulent activity.

 

[Lindsay J]

I appreciate the advice you are giving me when you are replying to my posts. I am using their written agreement and the fact that they did not notify me per their agreement as well as the fact that they bumped my rate before they pulled my credit report. They have told me I should have recieved a notice that they were going to place me on a non-prefferred rate in November 2004. However, they bumped my rate in August, before my son's late pay had posted!!!!
I feel I know why they did this, but I am saving the real reason until I get some more information from the cc co. I think they are using my son's late pay as an excuse after the fact! More to follow as things progress.