 I'm a model bill payer. A textbook obsessive compulsive about making sure my bills are paid on time. I've gotten up in the middle of the night and logged onto on line banking because I thought I was going to cut it close to a credit card due date. I follow up and double check, did the mortgage payment get paid on time? Did my credit card payment get credited? I know there's a risk if I'm late on one bill—all my low interest rates blow up on all my cards. I've been playing ball with the banks for years and have never struck out.
So I was shocked when I recently opened a letter from one credit card company, which said my interest rate was going from 6.9% to 24.99%. I panicked. Some error must have occurred. Somehow the bank thinks I violated those terms and conditions you try to mull through written in font size 6. Or maybe someone stole my identity! I knew I should have been leery accepting that "friend" request from that girl who said she went to my high school! I could not figure it out, I was never late, I was never over the limit, I read those stupid pamphlets. I know all the tricks--there's no way they can get me.
I called the bank. After going through telephone prompt hell, I got a live person on the phone who confirmed the bad news: My rate is skyrocketing. "But why!?" I asked, considerably confused.
"Um, Mamn", I heard, "I'm sorry, you have been a good customer for the past 12 years. Due to the economy, we are just doing that for a lot of accounts. It was just a business decision."
"What? Why are you punishing your good customers? That makes no sense!" I quipped at the powerless customer service rep, who has probably had to give this speech at least ten times that day to angry customers.
"I'm sorry Mamn." She responded, sounding like she could not decide if dealing with me was better than taking the next possibly angry caller's call.
Putting the fact that I hate being called Mamn aside, I tried to fight back, "get me your supervisor! I'm going to close my account then!" Thinking, ha, take that jab you jerks!
My punch was not returned. "Okay Mamn," she droned, "the supervisor will tell you the same thing. But since you called, you can keep your account open at your current interest rate until the card expires at the end of 2009. Then the account will close. If there's a remaining balance you can pay it off at 6.9%."
I was furious. This is the same bank I once called years ago to check if a payment was credited and they said, "oh by the way, we've been hoping you called in, your card was compromised in a security breach, we are closing that account and we'll send you a new card." I said, "what would you have done if I didn't call?" Their response, "we are just waiting for customers to call in." My response, "you gotta be kidding me?"
Now furious and suffering from interest hike shell shock, I called Carol Kaplan from the American Bankers Association and asked what was up. Was this some bogus excuse to raise my rate? How often was this happening? Kaplan said, "though there's been a lot of anecdotal cases of people getting their rates increased, it has been happening frequently. We aren't going to deny that, but when you look at the average rate right now, it's 14%, and that's way lower than it used to be. "
I don't want 14%, I don't want 24.99%, I want my 6.9% rate back. Why in the world did this happen? Kaplan said it depends what the bank's "risk formula" is for customers. Each financial institution's formula is secret, but she ran me through a series of commonly used factors:
- Do you pay on time? Yes.
- Do you pay all your bills on time? Yes.
- Did you increase your debt level? No.
- Did you open new accounts or new loans? No.
- Did you purchase new property? No.
- Did you change jobs? No.
- Did your income change? No.
We found that none of the above applied to me. I asked Kaplan if she thinks the bank's excuse that it's due to the bad economy was the real reason? She couldn't tell me exactly what my credit card company was thinking, but agreed it could be part of the economic downturn, "right now the risk climate is very high."
New rules soon go into effect banning banks from raising rates on existing balances. I now ponder if the bank hit me with the rate hike now, while it still can. It's a sad sign of the times. So the next time you get one of those little informational leaflets or letters with your bill, read through the painful fine print and legal jargon. If you get a notice that your credit card is going to raise your rate, call and say you want to opt out. Take this card and shove it. But remember to act on it, or you could be paying a lot more than you expect.
By Mary Schwager
http://www.examiner.com/x-1893-News-You-Can-Use-Examiner~y2009m1d23-New-sign-of-the-times-why-your-credit-card-interest-rate-could-suddenly-go-up |
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139 days ago by 
