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More Reports of Credit Card Interest Rates Raising Mysteriously

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I was sent two articles recently and both were about how some credit card companies are raising their interest rates for no apparent reason. There was some talk about it before, but it appears to be even more widespread.

The biggest culprit? Bank of America.

Bank of America spokeswoman Betty Riess confirms some bank cardholders could be receiving rate increases for reasons other than declines in credit scores, such as running higher balances with their Bank of America cards or with other creditors. She says the increases are part of a “periodic review” that assesses customers’ credit risk.

[Via AOL.com]

Businesses do have a right to make money. But does this sound fair?

The bank [Bank of America] said it planned to raise the interest rate on her credit card from about 13 percent to 24.99 percent. Fishkin, 60, couldn’t figure out what she’d done to incur the higher rate. She had never been late on a credit card payment, just refinanced her home at a lower interest rate and just been rewarded by her credit union with a lower rate on her credit card there, she said.

[Via Star-Telegram.com]

Fishkin tried to get an answer on why her rates were increased but couldn’t find an answer. With $12,000 on her card (due to recently relocating), the additional 11.99% in interest is going to hit hard.

I don’t think I have to elaborate on how upset I would be if my credit card decided to raise my interest rate. I’ve been trying to keep credit lines open to help our credit score right now, but if they raised my interest rate more than a few percentage points, that would be the last straw. I’d complete the paperwork to close the card and pay it off under the current agreement. That generally appears to be an option if this happens to you.

In letters that were seen by or described to The Charlotte Observer, Bank of America told customers that they could lock in their current rates if they requested it in writing and agreed to not use the card and paid down the balance. If they wanted to keep using the card, they’d have to agree to the higher rates.

[Via Star-Telegram.com]

I guess I just don’t get it. If a person has been paying their credit card as agreed at 13% – why raise it to 24.99%? Wouldn’t that make it more difficult for the person to pay the debt and they would be more likely to default? That is a huge change in the interest rate.

Or…are they hoping that those who have been responsible with paying their cards will still pay responsibly with the higher rates?

I’d love to hear your thoughts.

Thanks to Anne and Tracy for sending me links to the articles!


74 Comments

  • Reply Susan |

    This happened to me as well. I had a 750 score. I had never been late, always paid way more than minimum. We are in the waterproofing business and had a couple of years of drought, and had to use the cards more than usual. The credit card companies raised our credit line, then when we got close, but not to, the new limit, LOWERED the limit and raised the rate!
    They don’t do it because they think you’re a higher risk. They do it to you because they know that consumers who always pay their bills are least likely to default. They also started lowering limits when they got into financial trouble. The problem is, when they lower your limit, it appears as a negative on your credit score. Now, I, who have never missed a payment, have a 620 score because of what they did!
    Every consumer should watch the DVD documentary “Maxed Out”. It explains how card companies actually shredded or put payments in a drawer until they were late so they could charge the higher fees.
    It’s a darn shame that these same companies are holding out their hand for our tax dollars while they are stealing out of our pockets with the higher interest rates. They raise the rate, which in turn means less of the payment goes to pay off the balance. Then you, the consumer that faithfully pays, are indebted to them forever.
    We should have an intense campaign to lobby Congress and the President to make them lower those rates on previous balances.
    One woman has a site, Bring Them To Their Knees, http://bringthemtotheirknees.vpweb.com/calling for no payments at all in April, which would cripple the card companies.
    Something must be done to help the consumer, not the banks. No wonder the country is in crisis. These greedy banks are robbing us!

  • Reply Susan |

    Oh, yeah. When they close your account because you don’t want to accept the new rate, it will result in a lower credit score. The more open credit you have, the higher the score. Close an account, lower your score. Also, they will cite “too many inquiries” often as a reason to raise your rate. Those “inquiries” are usually only the banks themselves. Why should we be penalized because they decided to look at our credit history?

  • Reply Carmen Talbert |

    My husband and I have two seperate Capital One credit cards with a credit line under a thousand dollars. We have not been late on our payments, and have repeatedly paid off the balances. Our APR is 15%. Today we recieved a letter in the mail stating that our apr was being raised to 29.95% WOW!!!! I don’t know the reason why this is happening. We do have the right to decline this apr raise but then our account will be closed and we will lhave to pay off the balance. How can these companies do this at a time when everyone is hurting financially? THIS IS CRAZY and should be illegal to do so! We do everything we can to maintain our credit score, and yet these companies can do this at their discresion. They need to be stopped!

  • Reply Nirvi |

    Hello there. I’m writing about the issues many of your are discussing here for a story for The Miami Herald. I’m curious if any of you live in South Florida and would consider speaking with me?

    Thank you.

  • Reply trish |

    We just got a letter today. I say everyone should stop using credit cards,go to a credit union they have low rates,as low as 3.5% And may the credit card companies go under, and not take up any more of our tax dollars!!!!! Who needs them with those HIGH RATES!!!!!!!!

  • Reply iggy |

    BOA strikes again!! I paid off two mortgages, have investments, banked with for over 18 years, and have two credit cards with them, always pay ontime, no less than double the minimum payment, and they just raised one of my cards that was at 6.9 to 22.65!! This is total BS!! May they rot in hell!!

  • Reply davz |

    Happened to me today as well 4/9/09. B of A. as others have mentioned I have had ZERO late payment on any bills in over 5 years. 3100 balance at B of A. I called 2 different US representives and the White House and complained Chris Dodd Carl Levin and The white house . Who knows maybe everyone should call.

  • Reply Jill De Lany |

    Same as everyone above. Mine was raised from 7.9 fixed to 13.50 Adjustable. . . I called.
    Asked very simply: “How do you determine WHO to raise.?”
    Supervisor told me – 10 million got increase or opt out letters.
    I repeated my question. And, she said anyone who’s Interest Rate was under 10 % got the letter. . . .10 million vauled Visa customers.
    She also told me – I could opt out, but you know she said . ..not good for your credit rating.

  • Reply Jason |

    I’m pretty much at my end with this…. I’m gona keep my mortgage payment strong. Everyone else can eat my debt after I declare bankruptcy.

  • Reply Jennifer |

    Bank of America seems to be on a roll with this. My previous interest rate of 8.9% was recently raised to 21%. I too have never missed a payment with them
    or any of my other credit cards, and have always had my payments on time. I opted out of the increase
    (at about $7000 in debt with them after going through divorce procedures) it would have been financially impossible to make the minimums, let alone pay down the debt anytime before the next century… I’ve been a customer of BoA for over 10 years! And the customer service agent I spoke to on the phone lied and said the letter went out to EVERYONE, which now I’m finding out isn’t true. The funny thing is, another agent, when I was inquiring last month about a balance transfer, lied and told me I was going to be up for a promotional 0% balance transfer rate BECAUSE of my good credit with the company. Good thing I didn’t transfer any other balances to them!

  • Reply Ouida |

    I have a Bank of America card and my interest went from 8.9% to 24.99% after their so called review. So my reponse was to call then and refuse the changes. I will continue to pay off the card at the 8.9% interest and never have anything to do with Bank of America again. The same thing happened to a friend of mine and she could not pay them off until she got a lump sum payment to give them when she was laid off. i intend to call them today to totally close out the credit card so that no charges can be charged to it anytime in the future as they say if anything is charged the whole balance will go to 24.99% and they want to keep the card open so that somehow a slip up could occur and they have you then for the whole balance. I want it closed out or number changed so that no charge could be applied as I would be the only one to know the number.

  • Reply Jaci |

    Is it legal for the bank (Hells Fargo…I mean Wells Fargo) to change my payment due date on a visa?! My payment is always due on the 4th of the month & I always make online payments on the 2nd or 3rd with no problems with it posting on time. Today (June 3rd) I get online & see that I have a late fee charged to me on 06/02/09. I couldn’t figure out why until I noticed that my due date NOW says 06/02/09 instead of 6/04/09 (the 4th of every month like it has always been). I really can’t see how the heck this is legal.

  • Reply Rosie |

    I just had JCPenny Mastercard raise my rate from 14% to 28%. OUCH! I have been a great customer for 10 years-always making double payments even when they said I could take a payment vacation. Crooks! Never again with CHASE either. They did the same thing to me with their promotional “lifetime” offer of 8% interest rate that I received off the Amazon website. I am so stinking mad I feel like my heart is coming out of my chest. These credit card companies are stealing our money. Their interest is so high that I can’t get past the high balance. Then they assess fees for over the limit status. I can’t win for losing! Are there any lawyers out there who can help with this corruption.

  • Reply Linda |

    I had the same thing happen. Bank of america sent a change of terms notification and I called and was offered to keep my low rate if I didnt charge anymore. And also Citibank did the same thing but I only was given 1 option for 6 months at 12.9%apr then it is going up to 19%. I questioned why and was told because of the economy and everyone is doing it. I believe that the banks are trying to recoup their losses and get it from people who are paying their bills on time. As I am writing this my balances are being transfered to a credit union who has guaranteed not to raise the interest rate.

  • Reply Nancy |

    I’ve received letters from BOA and whatever cc co. Sears uses that they were cancelling my cards – cards I haven’t used for years. We still have 2 or three other BOA cards that my husband got when they were MBNA and we haven’t heard a word about them. The reasons were either: a review of our credit report OR a periodic review of their business practices, OR the fact that we haven’t used the card, etc. Take your choice; they’ve all just capriciously decided to chop heads/increase rates and there is no reason. I’ve only received two rate increases, one minor, from Chase Amazon, but as someone above said it was 8% guaranteed when it was offered 2 years ago and now will be around 13. I feel for anyone who has real debt on their cards or is a small business person who must have a credit card. I only use a credit card to make online purchases. The Credit Card bill is next to worthless. They must think we’re total morons. It does nothing to throw a line to people newly drowning in finance charges engineered by the very companies our tax dollars are keeping alive. It’s an outrage. They couldn’t even find the gumption to cap the rates at 34%! – it couldn’t be clearer who Congress really represents.

  • Reply Jan |

    Beware of closing your accounts unless you can pay it off in one lump sum. I closed a Citibank account and was paying them off in payments as agreed upon. They raised my interest rate from 12.9% to 29.9%. I called them to complain and they told me that it was considered ‘active’ even though I had closed it because I was making payments on it. Therefore they could raise the rate to the maximum allowed. I guess I should be thankful it was not to the full 32%!! IMO ALL credit card companies are legalized THIEVES!! With the new laws going into effect Aug. 20th and in Jan. they are ALL raising their rates and fees now so they don’t have to follow the law about having to notify the consumer 60 days before they raise the rates. They are going to end up bankrupting us all!

  • Reply G. Griffin |

    WE NEED A CLASS ACTION SUIT AGAINST CREDIT CARD COMPANIES for DEFERMATION of CHARATER
    • Pinging the credit reporting agencies – alone lowers the credit score.
    • Raising interest rates (the amount they did) flags us as a RISKY customers
    • Raising interest, increases monthly minimums – again changing net to worth ratios
    • Lowering our credit limits shows us as Credit Risk.
    • Domino affect, one credit card company makes you a risk therefore other card companies follow suit.

    Basically – we are screwed no matter what we do.
    • If we pay the credit card companies off, and close the account, we get a ding on our Credit Score up to 30%.
    • If you keep the card open and not use it, those that have yearly fees, have to pay that.
    • We cannot control when they ping the credit report so we are screwed there.
    • A credit report score tells the business world what kind of person you are. If you are not a risk, you have many doors open to you, and you feel good about yourself and your accomplishments in life.
    • A credit score allows banks to determine if they will lend to you, to open a small business, if that is what you want to do.
    • Employers look at credit scored to determine if you are a responsible person. If you are seeking a higher paying job, companies want people that take control of their financial situations.
    • With a lower credit score, if you are in the market to change your Auto, Health, or Home insurance it will determine how much you will be charged for coverage. If you are a “risk” you will be charged more regardless of your driving history, health conditions, or ability to pay.
    • They have caused good payers to suffer extreme mental anguish.

    I WAS NOT A BAD RISK until their Directors embezzled or lied about the financial condition of the company. Then they gave themselves bonuses!
    Those of use that pay our bills have been given the middle finger by the credit card companies.

    We are all a “RISK” to them. We are made to believe “it was our actions that forced them to do what they had to”, we are all bad people and must be punished. I didn’t ask for their bloody spending limit increase, and when I took them up on their offer they do this? I lived up to my end of the bargain and paid my bills.

    What they did to me and other GOOD, hard working people amounts to nothing more than Legal Extortion, Mafia like strong arming, and should be against the law!

  • Reply lharrell |

    So what do we do when we get a notice of a higher interest rate, opt out? It will take me forever to pay off these cards. What are people to do?

  • Reply Neva |

    Pretty much same story. Capital One raised my rate in April from 8.9 to 17.9 for no good reason other than that they could. Made me angry, so I opted out, closed the card, and began to use another card which already had a 17.24% rate. Not much diference from the 17.9 that Capital One was going to; and maybe some will say I cut off my nose to spite my face; but I refuse to continue doing business with crooks! Besides, I almost always paid my balance in full each month; so the higher rate would not usually affect me. Then, lo and behold I got a notice yesterday that the other card was increasing to 25.24%. So now I will opt out of this one and close the account. From here on out I think I will just not use any credit card. My debit card will work as a credit card on those occasions when cash or check is not acceptable. I know that a lot of people don’t have the option of completely paying off their cards; but I would highly encourage them to also stop using credit cards and just pay down their balances if at all possible. In both cases with me, I had the option to decline the rate increase and just pay the card off at the current rate if I carried a balance. If you get a notice, you MUST opt out before the deadline. Read your notice carefully!! If enough people quit using credit cards, maybe the cc companies will wake up and smell the coffee!! I think, though, that enough people will accept the higher rate that the cc companies will continue to accrue their ill-gotten gains. I also think that they wanted me to close my account with them because they weren’t making enough money off me. It made me angry; but I was willing to oblige!

  • Reply ALLETTA |

    I’m not the only one! I feel bad that people are in this boat. I opened an account with WAMU (before they flopped) I had an 11% APR. Fast forward 2 1/2 yrs my now Chase card carries a little over a 27% interest rate which is outrageous since I’ve never been late on a payment and always pay at least double the minimum. Maybe due to the fact that I do carry a balance but seriously how can they expect me to pay it down? My payments are eaten up by interest! I am trying to transfer my balance to a card with a credit union. I really want to cut all ties with chase and close out my account but I’m afraid this will hurt my credit

  • Reply gary |

    HSBC(GM Card) doesn’t seem to care about disabled!! I am a disabled person and have used my credit card ONLY for medical expenses that medical insurance did not cover. I paid every month on time and always over the minumium. Even though I may be poor and on a fixed income with only SSDI as my only source of income, I have always managed to have a good credit score as my goal was to eventually get better and rebuild my life. I was shocked to see my fixed 6.90% rate increased to 13.99%. I have no choice but to opt out and suffer the hit to my credit score. I called GM Card but they could seem to careless. God Help us all.

  • Reply Vicki |

    I have never been late on a payment, pay more than the minimum and Citibank just sent me a letter raiding my interest rate from 10.9% to 29.9%. I hardly owe them anything (less than $800).

  • Reply Alan |

    My rate went from 10.99 to 30.99 on Citibank card . The excuse given was to make credit available to there customers. I’m opting out, paying off and will never be a customer of these LOSERS again!!

  • Reply Sue |

    We recently received a letter from Citibank and our Sears store card that the interest rates on both of these cards are being raised due to difficult financial times. Of course this probably doesn’t have anything to do with the new legislation that is to go into effect after the first of the year that doesn’t allow them to raise rates on existing balances. Thanks Congress for giving them a heads up!

So, what do you think ?