Hello,

We have our share of credit card debt from the past, chipping away at it... Just received notification that my Household bank cards (MCard and Visa) are going to 23.99% from about 15-16%. I called and the gal said it was happening across the country and that this was actually one of the lower rates they give now. Yikes! Luckily the balance vulnerable to this can be paid off in about 3 months but I must admit that I wondered if they want to prod people to pay more off before Y2K? I have been a customer with them in decent standing with them for 5 yrs. ++. Of course this could just be a response of passing along the rampant BK costs to the consumers but......

Any one else seeing this stuff in their mail?

-- Kristi (securx@Succeed.Net), May 13, 1999

Answers

Probably can't blame this on Y2K --- it has been going on a long time. They do it because they can get away with it. Thye make a lot more money at 24% and a lot of people will hardly notice!

"I have been a cutomer with them in decent standing...."

Not to sound harsh, but you should realize that statement would be a joke to them --- they want your money, not your "decent standing".

Theres still some at 15% or lower. Quit this rip off group and get out altogether or go to a lower one. They will steal every dime if you let them.

-- Jon Johnson (narnia4@usa.net), May 13, 1999.

This is not a Y2K-related matter.

Their line about this happening "All over the country.." is false. I also "thought" there was some sort of "cap" on what "normal" credit cards could charge as a maximum rate. a certain amount over the prime.

But I could be wrong about that cap. It sounds like your "Household" has stuck it to you good.

Our household has...lets see, 8 different credit cards.

We use them alot and pay off the balance in full each month. Much of it is work-related expenses. No notices of increase in rates. period.

one of the reasons the economy is so "good" right now is that credit is relatively easy. People have taken out second mortgages and bought "stuff" or said they were going to and dumped in the stock market (oops!). They're leasing more car than they can afford. They're running up a lot of credit card debt, but not paying it off every month. I believe the card companies are taking advantage of the fact that ALOT of people have run up their cards at lower interest rates and now they can sock them with a higher rate...(surprise!)

again, pessimist that I am, I cannot see this being Y2K-related in any way. It's just business.

-- PLONK! (realaddress@hotmail.com), May 13, 1999.

Here is an excellent credit management tactic:

Locate the banks that are offering 5.4% to 9.8% interest rates. Call them to get their forms. Believe me, there ARE banks out there that have these rates.

Usually you get these rates if you transfer existing balances from other charge card accounts to the new credit card account. Since you have a good payment record, there should be absolutely NO problem in transferring the balance.

To save you this transfer hassel, you can then call your current card issuer and tell them that XXX Bank has offered you 5.4% to transfer your entire balance to them. Ask them to change your rate to 5.4%. If they don't, then transfer your money.

This has WORKED for myself and friends of mine. The bank will try to keep your account, especially if you are a current paying account holder, no matter what percentage they get off of you. They'll usually do it if you let them know your intentions and you give them specific information about the other bank(s) you are considering.

Happy finances,
Mr. K

-- Mr. Kennedy (Mr.K@work.today), May 13, 1999.

KRISTI: The on-going duluge of unsolicited offers to:

1. Re-finance my home, pocket my equity/buy a new chariot/take a trip, lower my payment, pay off my bills, etc. 2. Try our new "Platinum/Zirconium/Kryptonite/Gold Card" at a reduced interest rate of .0000000005% rate for the first 6 months!

continues at my mail box.

Actually I just received in the mail, unsolicited as usual, several "checks" from a bank whose credit card I have had for over 25 years. I have a large line of credit on this particular card that is "active," at an "attractive" interest rate, on which I maintain no outstanding balance. They offered to waive any cash advance fees and suggested that I use them for one of the reasons in #1 above.

Kristi, these are uncertain times. In response to uncertainty one of the certainties is that those with exposure (lenders) are going to reduce their risk, One of the ways will be to tighten credit. My receipt of the "offer" that I described above may be an attempt to motivate me to undertake a large balance that will then have to be "serviced" at an expected higher interest rate. Perhaps Mr. Decker who has demonstrated that he is very knowledgable in such matters, will weigh in with more "meat."

These are uncertain times......

-- Dave Walden (wprop@concentric.net), May 13, 1999.

This happend to us as well. I cancelled the card and paid it off. Then they sent us a nice offer for 3.9%. Only problem is you have to reapply. I'm wondering if this is their way of forcing a disclosure of current financial status (to revise their databases) so as to downgrade the customer's credit. I'm not sure that they can out right ask you to give them updated information.

We will be cancelling every credit card and bank account by middle of summer in preparation for data screw ups. Don't see why we can't live with no credit cards. Will also be cancelling alot of other services to get a 'miminum profile' exposure to any systems problems which might bite if TEOTWAWKI doesn't happen right up front.

So sad for those who lend money/extend credit .. NOT!

-- David (C.D@I.N), May 13, 1999.

Kristi,

Please check out the following web site for oodles of info:

Bankrate.com

From the above site: The national average credit card rate is currently 15.49%.

Do yourself & your family a favor by becoming an educated consumer. A 24% interest rate is absurd.

If you really wish to stay with your current credit card company, even though they charge a higher interest rate than my childhood friend Vito (hands like meat hooks & a nose to match), call the customer service dept. & ask to speak to an accounts supervisor. Tell he/she in no uncertain terms that the national average interest rate is 15.49%; You would like to avoid canceling your account; How can you (supervisor) help me (Kristi) do this?

Dollars to donuts the supervisor will offer to elevate your account status (silver to gold, gold to platinum, platinum to titanium), which lucky for you carries a lower interest rate!

Definitely mention the flood of offers from First USA & Bank One which carry a 3.9% rate for six months & then convert to 9.9% with no annual fee.

Best Wishes,

-- Bingo1 (howe9@pop.shentel.net), May 13, 1999.

Bank One Credit Card sent me a bill a few months ago with an annual fee of $25.00 and charged $10.00 to send me my new cards. I called and said I would cancel if they did not remove these charges. They removed the charges.

What bunch of assholes.

-- GeeGee (GeeGee@madtown.com), May 13, 1999.

If all the schmuck sheeple (hopefully not including you, dear reader) had not got into the habit of writing a check or using a credit card to buy a frickin' pack of gum at the drug store, and carrying that balance on your card for six months, the credit card companies and banks wouldn't be pulling that crap.

-- A (A@AisA.com), May 13, 1999.

Wonderful round-up of sharp practices and over-forgiving customers!

Personally, I don't give financial organisations that try this sort of thing a second chance. I just tell them that I don't want their card (or whatever) any more, and if asked why, I tell them that I know perfectly well what the market rate was, and that they were trying to take me for a fool. Some insurance companies get really upset when they raise their renewal rate by 25% and then find I've phoned a few of their competitors' 800 numbers for a reality check!

If more people cancelled in response to sharp practices, they'd be less inclined to try them. Why don't they try customer loyalty discounts instead like the stores do? Surely a renewal is cheaper than a new customer?

All utterly irrelevant to Y2K. If you can, pay off all the cards. If you can't, I fear you may be in trouble.

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), May 13, 1999.

Suppose you are a lender. You have a database of hundreds of thousands or even millions of clients. Mine your database, searching for the following characteristics:

Pays on time
Usually makes minimum payment
Has high outstanding balances on multiple cards
Has other debt obligations, e.g., house, car, or student loans

These are your 'fairly stretched' but 'very conscientious' payers. They will not default. Send increase notifications to these clients, do not back down much when complaints come in. They likely cannot pay off their balances. They've assumed so much credit that they will likely not be able to or not be willing to seek another card. They will pay the 50% increase in interest with little recourse. They will pay the minimum at 24% interest forever, for this is the pattern they've established. If they do pay off their card and cancel, entice them back with a teaser rate and start the process over again. The overall increase in interest income will far exceed the losses from any cancellations.

If this sounds like you, pay off your card and never use this lender again. If you absolutely cannot pay off your card without help, approach family members and/or close acquaintances. Explain your predicament. Offer them ~8% APR for an immediate loan to pay off this card or all your cards. Pay this loan back to you family/friends religiously, even early, if possible. This should be no problem because you were "specially selected" because of your exemplar payment record. This is a win-win situation for everyone (but the banks). You get out of debt at reduced rate. Your family/friends receive above market rates on a short-term, private loan. Cut out the wealth-sucking middle man and never look back.

-- Nathan (nospam@all.com), May 13, 1999.