Credit card companies screwing the consumer.

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~sudsshane

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Boy, was I shocked today to learn that my interest rate on my Barclay's Bank Mastercard was being raised from 8.9% to 14.99%, effective May 1st, 2009. I have had this card nearly 3 years with a perfect payment history, never exceeding the limit, etc.
Hell, just last year they increased my credit line from 5,000 to 7,000 dollars due to my payment history. I never asked for the credit increase,they automatically gave it.

So, what was I told when I called Barclays Bank customer service to verify this?

"Well, sir, yes I understand your frustration, and yes, you have been a great customer, but everyone's interest rate is going up due to the bad economy, and people defaulting on credit cards payments. I swear I wanted to reach through the phone and choke this guy. I pay my bills on time and do everything right,and in the end, we all are getting screwed by irresponsible people who defualt on their credit accounts.

It is infuriating!

Has anyone else experienced this?
 
Has anyone else experienced this?

Why yes, yes I have. American Express just increased my card from 7.99% to 17.99%. Never late and always pay more than the minimum and it was a card that I did a balance transfer to at that rate. When I called to ask about it they told me that it's in the agreement that they can increase the interest rate at any time.
 
oh great...

Which American Express card do you have?

I have the American Express "Blue" card which allows you to carry a balance, or pay it off in full each month with no interest. My interest rate is 8.99%.

Did they say they were doing this to all customers?
 
Balance Transfers.

I am looking online to see if any banks are offering a 0% interest rate on balance transfers for one year.
Since I owe a relatively small amount to Barclay's, I will transfer the balance if I can, and just keep the account open and at zero.
 
cash is king...
so is living within your means...
and putting money away for the proverbial rainy day...
and if you use your cards, pay the bill off in full...
 
Well, for once I agree with you on something, PeterH.

I have never carried a balance on my credit card, unless I accidentally forgot to mail in my monthly payment on time (this has happened about twice in some 25 years). My credit limit is nearly 50k, but I've never gotten even close to that. Never have figured out why it's so high, but I'm not gonna complain about it. I pay off the bill each month in full. I regard it simply as a convenience when shopping, and a bit safer than using a debit card. Debit cards are final, and there have been cases of people hijacking the card info and PIN number with rigged readers, and then draining checking accounts. Never bought a vehicle on credit. Did take out college loans many years ago, paid those off in full. Only debt is the home mortgage... and can't wait until that's done. After that it's taxes and insurance that will be the big hits.

I remember, just for the heck of it, calling my credit card company and asking if they could give me a lower rate. They wanted to get detailed information about my income, job history, purchasing habits (as if they didn't already have all that), etc. I told them it wasn't that important to me. Not really sure what my credit card interest rate is, cause I never intend to use it for anything more than a short term interest free loan of less than 30 days.

If everyone paid off their credit card balance in full each month... the system would collapse. Probably would be a good thing, too.
 
I hope they do collapse! Then the bastards will get what they deserve. I have grown to HATE credit cards and in the past have carried more on them that I should. I'm still paying down some credit but within a year or so should be debt free. I wish I had thought more wisely in my 20's and utilized less credit.
 
Welcome To The Club!

Received a letter last week from Capital One stating interest rates on my credit card will increase from about 8% to nearly 18%. Like yourself, never pay late and always pay more than the minimum required. Indeed often pay the balance down to near zero.

Apparently this is happening all over the United States. Consumers are being hit with all sorts of rate increases, and or credit limit decreases, along with assorted fees and surcharges. All are happening regardless of a person's history with the company and or credit rating/score. Excellent, good or bad customer the only difference is in how hard one will be hit. And even then it is not that much of a difference.

Basically several things are going on:

The credit crisis has cost banks dearly in terms of profits. Not only are persons defaulting and or paying late, they are finding it hard to sell off consumer debt in the form of bonds, and even when they can the rates offered are much higher than before.

Banks have also seen their stock prices fall through ground and need to raise cash to increase their reserves any way possible, this means turning to their cash cows, deposit bank accounts and consumer credit accounts.

Finally the federal government issued rules several months ago which will ban certain now common credit card processes. Thing such as "universal default" raising interest rates at anytime for any reason, even on balances charged before the rate increase, and so forth will not be allowed by May (forget the month, but it is sometime next year), so banks are getting while the getting is good.

In their defence banks say they are offering consumers who do not agree with these new interest rates a choice: they can simply decline to accept and close their account. While they will no longer have access to the account for credit, consumers can pay off the balance at the old rate.

American Express by the way is actually paying some customers $300 to close their accounts.

Citibank is now charging credit customers something like $10 per month surcharge on their accounts, in addition to any interest rate increases.
 
I too always pay my credit card bills in full each month.

A couple of years ago, I bought some furniture at Macy's. They gave me the option of financing it on my Macy's card -- at zero interest -- if I paid it off within a year. It took 11 months. I probaby should have taken the money out of the bank and paid it off. Having this unrelenting bill really got on my nerves. (They kept showing what the interest would be if I didn't pay it off in time. I think the interest rate would have been 21%. Yikes. That was scary.)

Mike
 
Oh And By The Way

Do not think you are safe from this because you have credit cards with no balance due, but do not use it for long periods.

Credit card issuers are not missing any beats, inactive accounts are being closed without notice and or being charged fees per month. While at first glance closing out an account you rarely use may seem like a good thing, but it can do serious damage to your credit score.
 
My experience

Hi guys,kinda glad this has come up as a discussion,this is what happened to me recently, my Mastercard with I.M.B. Building Society for some reason is administered by Citibank here in Australia,don't really know why perhaps because I.M.B. is still a smaller building society and not a full bank,anyway when I was approved to get my card it came with an incredible $17000.00 credit limit,(I did not ask for, nor did I expect such a huge limit,especially when you consider I only earn $750.00 per wek gross salary.),it started with $5000.00 limit to begin with,now I was planning an overseas trip to Canada later this year and upon doing my sums, I needed an increase to my limit,and I thought this would be okay as they had already pre-approved the $17000.00,now I did not want the full amount just an increase by 2-3 thousand to cover spending money etc,well when I asked they refused saying I had not been with them long enough and I would have to wait 9 months before they would even consider an increase!!!!,(why then pre-approve $17000.00),I was going to Canada in May this year and have now had to cancel my trip because to pay for everything out of my savings would leave me with very little money in the bank, fortunately because I have given the travel agency and the tour operator plenty of notice, I will get most of my money back,(you see I had already booked and paid for sightseeing tours,but not airfares,thank goodness.).
I sent Cardservices a nasty email about this basically telling them I will be looking for an alternative card, and they simply did not care,they gave sosme platitudes about wanting to keep me as a customer etc,but were not going to break rules because it would lead to an avalanche of similar claims????,mind you like most of you good people. I always make more than minimum payments each month and paid of a personal loan a few years ago, in 15 months, more than 3 years before I had to.
They could not give a reasonable explanation as to why they preapproved $17000.00 dollars, but won't actually give it to me until it suits them.
Maybe it is time to return to the past a bit and save for things one wants,whereever possible.
Cheers guys.
Steve.
 
Here in the Netherlands credit cards are not so popular. Most non-cash payments (the popular Dutch word for this is "pinnen") and money withdrawals from your account are done using bank cards that come with your bank account and cost nothing extra to use. I do have a credit card, but I only use it for some internet purchases. The cost of a bank account with bank card and credit card is ca. 30 euros per year. My credit limit for the credit card is 1500 euros and when I pay my credit card debt within 14 days (which I always do) I don't have to pay any interest. Otherwise the interest is 15%.
 
Theo,

I think what we use for payments are called debetcards in the US. Our creditcards work sort of as extended debetcards. Only when you don't pay the bill at the end of the month it's turning into a real creditcard debt.

If I read threads like this I'm very happy not to have a real creditcard, life gets pretty expensive with them!
 
Indeed, mainly in the United States does one see what is called "credit cards". France, the the rest of Europe has mainly what are called "debit cards" in the USA.

France has "Carte Bleu" which basically is a debit card.One pays for items with it like a credit card, but funds are withdrawn from one's checking account. If the funds are not there,the transaction will be declined. One can however set up a "Carte Bleu" account to bill monthly, say in order to manage cash flow, but there will be a limit on how much one can "charge" per cycle.

Europe,being an older place than the United States, still has some "old world" ideas in places. One of them is the advere to "credit" and being "in debt". One lives within one's means and buys what one can afford.
 
I've had a Discover card for years, never charged more than a $1000.00 or so on it, paid it regularly. It seems to me about every 6 month's or so I get a letter where they're changing their agreement or interest rate. Next statement, I pay it off, and close it.

I've alrady closed a Chase card I haven't used in years, that will leave me a Chase Amoco card for emergencies. Debt free, is the way for me!
 
Louis,

As I understand it, I have a bank card (debit card) and a credit card. The debt limit for my bank card is 250 euros and the interest on debt is 14.2%. I can't use the debit card for credit card payments. For the credit card the limit is 1500 euros and the interest on debt is 14.9%. The credit card is only used in case there is no alternative as it is generally an expensive option. Many use it only for internet purchases and when on holiday. It seems that only with a credit card you can rent a car in the USA. One of my colleagues applied for a credit card just for this purpose.

http://en.wikipedia.org/wiki/Debit_card
 
Citigroup has done the same thing- my rate went from 4.9% to 13.99% for no explicable reason - when I called, I got the same answer about the number of defaults, etc... And I don't think any lectures about not having debt are appropriate here. Congratulations if you haven't, but a responsibly used credit card isn't a crime and we should not be penalized by institutions like Citigroup. The overriding issue here isn't that I shouldn't carry a balance on my card. The issue is one of ethical responsibility - Citigroup for example has already received multiple billions, and I do mean multiple billions in federal bailout money and is still looking for more. Then they turn around and pull a stunt like this on their credit card customers. Legal? Yes. Ethical? No. And don't get me started on the resident genius CEO Vikram Pandit. What a mess!!!

And just so you know, I called Citigroup card services and refused to get off the phone until I got a service manager who agreed that this was ridiculous and agreed to keep my rate for another year. But guess what I will ensure within the next few months? NO debt of any kind. But keep in mind that even if you don't use a card it may damage your credit score to close it. Then you have less credit available and it screws your ratios.

While we are on the subject - if credit card companies can do this, then why shouldn't Audi Financial SErvices just decide to increase the interest rate on my car loan from .9% to 13.99% as well? Or perhaps the mortgage company should make everything variable rate? I realize there is a difference between secured and unsecured credit - but since all bets seem to be off just imagine what could happen...
 
Here's a simple strategy for dealing with credit cards - STOP using them and beat them at their own game. When banks start understanding that the balance of power has shifted, they will have no choice but to restructure their offerings much more favorably to the consumer. If folks don't start living within their means, and saving money rather than living on easy credit, nothing will ever change. The power is in our own hands, so stop blaming banks and credit card companies, and look at the source of the problem...the consumer. Aside from true emergencies, there is no reason to use a credit card. It's just too easy for too many people in these days of instant gratification.
 
Hate to say it, but I'm a points-guy....like Sudsmaster, haven't paid a finance charge in years...I've been getting some of the points cards (Delta AMEX, NWA Visa) for some extra FF miles but they get closed when the fee gets put in place (they generally give you a free year). My main card is a Citibank Diners Club which I've had for years...good points/miles program and they have first-dollar coverage on rental cars.
 
I'm counting my blessings after hearing what's happening to some of you. Knock wood, I haven't gotten a "raising your rate" letter from any of my credit card companies. Including Capital One (wonder why you got one, Launderess, and I didn't. Aren't they doing it across the board???).

In fact, I accidentally forgot to pay the Cap One bill early last month and it was posted a day late. I got a $39 late fee, but called and they immediately reversed it. Even one day late can trigger the alternate interest rate (probably 19% or higher at this point) but the new statement doesn't reflect and change. I'll be holding my breath for the next one!

As far as a yearly fee, whenever I see one, I call to have it removed. Again, knock wood, it's been reversed every time. And, each time, they say it's a one-time courtesy. Only one card has a fee, and I let them know this when I call. Maybe that helps?

What I'm curious about is the credit score change. Even though we just got our mortgage less than a year ago, our broker let us know that they were now offering 5/8% less, and if we refi, we'd recoup our closing costs in about 14 months. After that, we save about $85 a month. When discussing the options, I asked how it would affect our credit scores (we were both near 780). He told me that the powers that be changed how they calculate the credit scores. How do they arbitrarily do something like that? Sounds to me like they're changing the rules to suit their needs. What's next? A squared + B squared doesn't = C squared????

Chuck
 
Great link Theo! My situation is more or less the same as yours. My limit on my debit card is €500.-, I actually brought it down after the bank had brought it up to €1000.- by themselves.

I actually don't know what the limit on my credit card is. I asked sometime but I forgot. I got a credit card many years ago for renting a car. Some companies in the Netherlands required it back then already.

Besides my regular bank account, my saving account and my credit card I also have a "doorlopend krediet". To the Americans I'd best describe it as a flexible loan. You can withdraw or put back the money as often as you want. The limit on my credit is €6000.-, but I haven't used it for quite a while now. I prefer this over a credit card, the interest is much lower.
 
I have only one credit card to my name - the one I pay off each month. I use it for purchases at shops, gasoline, and to make internet purchases (either direct to credit card or via Paypal to credit card).

One aspect not mentioned here (I think) is that credit card companies also charge the stores about 3% of the purchase price. A lot of gas stations have slim margins, maybe 10%, so a 3% hit from the credit card company significantly reduces their profits. So a lot of lower cost gas stations don't accept credit cards, or post two prices: one for cash, one for credit. Most of the cash-only stations will accept debit cards, but usually with a $.50 to $1.00 surcharge. As a result I've started carrying enough cash to pay for gas, or I drive an extra mile or so and buy the gas at a station that doesn't surcharge for debit cards, and also has just about the lowest price per gallon in town.

So if everyone paid off their credit card bill each month it wouldn't mean zero income for the credit card companies - just a lot less income.

If my credit card company started charging me a monthly fee just to have the card, I'd probably drop it - despite the high credit limit (I have no plans to buy a $40,000 car with it anyway).

One needs to think about the total cost of credit. Let's say you carry a $1,000 balance on your credit card every month, you make the minimum payment plus enough to keep the balance around $1,000. Let's say you have a relatively good interest rate of 12%. That $1,000 you carry will cost you $120 at the end of the year. If you miss a couple of payments, your rate could jump up to 20% or more. Then that credit balance will cost you $200/year. I dunno, I would rather put that $200 into an interest bearing account, or pay off my mortgage a little earlier. Speaking of which, if one must use credit, a home equity line of credit is a much better deal - plus I think you can deduct the interest on that type of loan. Another way is to refinance with cash out... usually even a lower rate of interest and guaranteed tax deduction. Of course, since my goal is to become mortgage/debt free, I don't plan on using any of those strategies. But for someone who is carrying a large credit card balance it's a possible way to reduce the total cost of the debt.

It's also interesting that our banking system is completely dependent upon consumer debt. And the banking system controls the creation of fiat money through debt. Thus, if everyone became debt free then there would be a huge implosion of the money supply. How the heck did we get into this absurd situation? (rhetorical question, I know the answer).
 
We got the same letter from Cap One that you did Laundress. In addition, Cap One is now charging a $19.95 fee for electronic payments. We pay online through our bank because it is so easy and fast. Cap One says if we continue to pay this way, we'll be hit with the surcharge. The only way not to get hit is to mail a check every month. We called them, and of course they blamed all this on the state of the economy. I asked the agent how many calls they are getting about the interest rates being raised and these surcharges and he replied that almost all their calls are about this!
We hardly ever used our Shell card, maybe twice a year on out of town trips, and last week they canceled it due to "inactivity". they said if we want to keep it we would have to reapply.
So we use out debit cards for most everything. We do take advantage of those 12 or 24 months interest free deals from companies for our major purhases (such as the appliances we bought in November) and so far these deals have worked out to our advantage.
Fortunately, we don't have any major purchases upcoming and have everything we need for the forseeable future.
It seems that every company out there is just trying to drain every last penny out of the consumer while they can!
 
or I drive an extra mile or so and buy the gas at a station

Sudsmaster,

No one usually takes the time to report this to Visa or Mastercard, but they can't impose a surcharge if your debit card has the Visa or MC logo on it. It's against both Visa's and MC's merchant agreements.

They may offer a discount for cash, something our local Shell has done, but may not impose a surcharge.

Interestingly enough PayPal has the same clause in their user agreement!

Chuck
 
Chuck,

My understanding is that the prohibition against surcharging only applies to credit purchases, not to debit card purchases.

As it happens, my card does have a Visa logo on it... but I would think it would be like pulling teeth to get the gas station attendant to even understand what I'm talking about.

I suppose I could call the bank that gave me the debit card and ask for their opinion on it. Somehow I think cash is easier, lol...
 
I retired all my credit cards cept one when I retired almost 3 years ago. No more store cards or gas cards, all gone. I kept my bare bones Visa card, no points, no nothing, and only use it sparingly for renting a hotel room or car. I hadn't used it in over a year so I did make a small purchase just in case they were thinking about trying anything funny about me not using it. Geeze at one time years and years ago I must have had about 10 of them on the go and it wasn't fun.
 
I, too, have gotten the letter from Capital One, stating my interest rate will go up to 18%. I will decline the rate increase, which will close my account, and I will pay it off under the current terms. I need to pay off that balance, and this will insure that I do it. I must have missed the part about electronic payments. I need to go read that letter again. $19.95 for an electronic payment is a bunch of b.s.!! IMHO
 
Store Credit Cards

Are normally the worst in terms of interest rates. Sears charges something like 27%, and that is for good customers.
Needless to say only charge items one can pay off at once, or use Sears's "interest free" programs for major appliance purchases. Even then one really has to read the agreement carefully. In general wouldn't trust Sears an inch, and that is why one hardly ever uses the card. When I do, it is mainly for Lands End merchandise. So many poor people out there are being sucked dry by that almost 30% interest from Sears. The appliance purchased on credit probably will long be in the dump and they have paid almost half if not twice the price in interest, by the time the thing is paid off.

L.
 

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