The New Credit Card Hustle

[ensho]

http://airamerica.com/blog/2009/mar/11/new-credit-card-hustle


During these tough economic times, national credit card companies have decided to make the lives of consumers even tougher. Cardholders are receiving junk-mail-looking letters in the mail warning them of an interest rate hike coupled with an "opt out" clause. The interest rate increase is substantial. For example a woman in Iowa reported an increase from 13% to 25%, a Chase card customer received notice her interest rate would increase from 4.24% APR to 9.24% and a Capital One cardholder with a current interest rate of 5.37% has been told her rate will increase to 13.9% on purchases and 24.9% on cash advances.

The "opt out" portion of the notice makes for an even more stressful decision. In some cases, the cardholder will have to pay off the balance of the credit card within the 30 days and then close the account.

Since credit card companies are targeting customers with already low interest rates, more than likely the cardholder won't go anywhere.

Janes Brain of the Daily Kos, a victim of this new scheme investigated further:

They're raising the interest rate on my current balance & future payments to 22.85%.

They're reducing my payment cycle to 23 days.

They're increasing the delinquency rate to 26.99%.

If an account's finance charge is less than $1.00, they're increasing it to $1.00.

Interest will now be compounded on a daily basis, rather than monthly.

They may contact you using any number you've ever provided them and that includes being contacted by a pre-recorded voice, even if you are charged for the call under your phone plan.
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what to do?

[Democrats_win]

1. Getting fleeced. Credit cards should be illegal.

[meegbear]

2. Sucks being Janes Brain of the Daily Kos

[susanna]

3. Sucks being Susanna of DU too.

Capitol One did it to me and DH, great credit, good customers. We'd take a hit on our credit scores if we close our cards. Not pretty. Actually it's disgusting, in my opinion. Hope it doesn't happen to you.

[meegbear]

4. Sucked being me ...

when the Bankruptcy Bill was passed, one of the sections dealt with credit cards. I had 4, all almost maxed out. When the law went into effect, the card companies "retroactively" raised my rates for being late a few months earlier. 28%-31%!

Went into debt consolidation and I now have 3 payments left and the last card is gone! Over three years and a half years, having to cough up over $700 a month for them.

Chase and Bank of America can burn in hell!

[susanna]

6. OK, then we're on the same page.

It's not going to affect me as badly as someone carrying a balance; we pay them off monthly. I think it's just the principle of the thing. Bloodsucking leeches. I'll second your burn in hell and raise it to CapitolOne, too. :-)

[Davis_X_Machina]

5. It's actually quite rare...

...for an immediate repayment to be called for if you opt out. And beginning in 2010, it will be illegal to do so.

I've opted out of a couple of cards whose terms changed, and in one case was contacted to see what the cardholder could do to retain my business.

Something else to watch for is a kind of cramdown that can screw your FICO. Part of the FICO equation is the ratio of available credit to existing balances. They can lower your credit limit down to, say, $100 more than your outstanding balance, and in the process screw your FICO, even though you're 100% on-time and under limit.

[marmar]

7. In screwing their customers they're writing their own epitath.....

..... Makes you wonder just how idiotic their braintrust is.