by Tricia
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!
