T Nation

Credit Card APR Jacked UP!


#1

Recently took advantage of a promotion to transfer a balance from one credit card to another for a 1% APR. To make a long story short I was late on a payment and they jacked the rate up to 25%. I talked to them over the phone and they would not change the rate back.

This was a card I payed in full every month (used for business) and though I did pay sometimes after the due date was never 30 days late.

This is crazy that they can charge you this high of a rate with no recourse.

Anyone else run into this issue and was able to resolve it favorably?


#2

They are changing the way all credit cards work. Didn't you get the memo?


#3

google "universal default clause"


#4

Yep, even if you make your online payment on the due date, or even the day before, they can take a few days to process the payment, making your payment... you guessed it... late. They then happily jack your rate up. It sounds like you were genuinely late, but it still sucks. Is this BOA, by any chance?


#5

Yea dude NEVER EVER Pay a credit card even 1 day late. I currently carry an 8% rate which is solid. If I am late on any payment ever they jack it up immediately to 24%, at that point it becomes completely useless to me. 8% I can handle if I need to carry a balance on something for a couple months, like buying a new washer dryer or doing a small remodel to my basement (finishing it). I'm not down for 24%, Pay that shit off, and cut it up but do not cancel it.

That will fuck your credit even worse. Once you have gone 2-3 months without placing a charge on the card you can call customer service and tell them that you plan on never using it again unless they forgive your lapse and give you your old rate back. Sometimes this can have beneficial results, especially if they see you can go without it.

V


#6

I got it the hard way


#7

I always thought that as long as you paid before 30 days late you were OK though there was a late fee. I'm going to pay it off but its the principal that they can raise the rate so quickly so high. They quote you there "Terms and Conditions" which they wrote and you have no opportunity to change and they are totally inflexible. They smell blood. They know there is a wave of credit card defaults and bankruptcies coming so they are going aftetr those that can pay to get as much as they can


#8

Its a Fidelity card that is run by BOA. Why?


#9

they make millions in these late fees and jacked up interest rates, best you can do is pay it off and then tell them to give you back your preferred rate.


#10

BOA is very bad about predatory practices. This same thing happened to me, also, with BOA, only I paid on the due date, and it didn't credit until the next day, so they got me, too. They refused to change my rate, so I cancelled the card and paid it off quickly.


#11

I had BOA actually charge me a late fee, when my payment was 5 days early. When I called, they saw themselves that I paid early, and they removed the late charge. I swear, they will try anything, mother fuckers.


#12

I had a similar deal with my truck loan . I was about 5 months ahead on payments when I got a late fee notice in the mail . of course I called and asked how it's possible I could be late when my next payment is due in like 4 months . dude couldnt even figure out how many payments I had made up to that point . seems I got so far ahead in payments I "confused the system" .

imagine that


#13

Credit cards are the anabolic steroids of the economy. When used properly, they're perfectly safe and allow you to grow beyond your normal economic potential. When used poorly, they'll fuck you up. If you don't know what you're doing, you shouldn't even start with them.


#14

Alas, poor Yorik, some of these financial instititions use them as a sprung trap. Most people wouldn't even notice that their APR had gone way up for many months, and over something as innocent as posting your payment on the day it is due???


#15

I certainly hope you weren't 30 days late... That will seriously fuck up your credit. If that's the case, let me know, I can give you some advice on how to dispute it and have it removed.

As for them jacking the rate, tell them that if they don't lower the rate again, you will transfer the balance elsewhere... And follow through with it. 25% is CRAZY! I don't even see how it is legal - with all of the scrutiny the banks are under...

Better yet, pay with cash...


#16

No was not 30 days late. I talked to a lawyer buddy of mine and told me I am basically screwed. The credit card insustry is the only industry that can rewrite their terms and conditions any time and unless you have the ability to payoff the card if you happen to read and understand the Ts&Cs and don't like them, your stuck.

25% is crazy. I discussed it with their "retention department" but he told me there is nothing they could do. Even if it were illegal I don't know where to turn to get it resolved.

The system is rigged. If you care anything about your credit score, which they control, and want to buy a home you have no choice but do what they want.


#17

Yeah, just work hard to pay it off, then tell them to cancel your ass. Do you have a credit union? The terms at CU's are usually much more friendly than at these huge financial institutions.


#18

X2, Once I have a bit of money saved up and I can afford my credit to take a hit, I'm canceling all my cards and switching banks to a credit union. I have my house now and don't really plan on using my cards too much but I need to have a bank of emergency money because if you cancel some big cards, I have one with a 30,000 limit and one with a 16,000 limit, it really kills your credit score for a while. One of the key figures in credit score is outstanding debt vs available credit. So if I have 6,000 in available credit and 5,000 in credit card debt, thats going to hurt by score pretty bad, if I have 45,000 in avainlable credit and 5,000 in cc debt, that looks pretty good and thus my score is very high. THE WORST thing you can do is cancel your cards when they still have a balance on them. you will then have a negative ratio to debt vs available credit. Your score will tank and you won't be able to finance a pack of bubble gum.

V


#19

I have been hearing and reading that some credit card companies are even taking it so far, as to look into your credit history and if you have late payments on other items they will raise your rates. I don't know how that could be legal.


#20

http://www.pbs.org/wgbh/pages/frontline/shows/credit/view/

The below is quoted

Millions of American families use their personal, general-purpose credit cards such as Visa, Mastercard, American Express and Discover to make ends meet; credit cards have been a discreet lifeline for families in financial straits.

But other consumers, like actor and author Ben Stein, use plastic purely for convenience. While it would appear that Stein -- who says he charges a small fortune every month on his credit cards -- is the ideal customer, in reality, he is what some in the industry call a deadbeat. That's because he pays his balance in full every month.

The industry's most profitable customers, the ones being sought by creative marketing tactics, are the revolvers: the estimated 115 million Americans who carry monthly credit card debt.

Ed Yingling, incoming president of the American Bankers Association, tells FRONTLINE that revolvers are "the sweet spot" of the banking industry. This "sweet spot" continues to grow as the average credit card debt among American households has more than doubled over the past decade. Today, the average family owes roughly $8,000 on their credit cards. This debt has helped generate record profits for the credit card industry -- last year, more than $30 billion before taxes.

According to Harvard Law Professor Elizabeth Warren, the credit card companies are misleading consumers and making up their own rules. "These guys have figured out the best way to compete is to put a smiley face in your commercials, a low introductory rate, and hire a team of MBAs to lay traps in the fine print," Warren tells FRONTLINE.

Warren and other critics say that a growing share of the industry's revenues come from what they call deceptive tactics, such as "default" terms spelled out in the fine print of cardholder agreements -- the terms and conditions of which can be changed at any time for any reason with 15 days' notice.

Penalty fees and rates are sometimes triggered by just a single lapse -- a payment that arrives a couple of days or even hours late, a charge that exceeds the credit line by a few dollars, or a loan from another creditor which renders the cardholder "overextended" as defined by the nation's three all-powerful credit bureaus. This flurry of unexpected fees and rate hikes come just when consumers can least afford them.

"[Banks are] raising interest rates, adding new fees, making the due date for your payment a holiday or a Sunday on the hopes that maybe you'll trip up and get a payment in late," says Robert McKinley, founder and chairman of Cardweb.com and Ram Research, a payment card research firm. "It's become a very anti-consumer marketplace."