Once upon a time, I had a Bank of America Visa account with a credit limit of $11K. During a period of hardship, I ran it up to around $10K before paying it down to zero. My reward for paying it off was having my credit limit lowered to $6,600 and my interest rate raised from 12% to 19%. A year or so later, another stretch of hardship ran my debt up to a little over $5K before I could stop using it and start paying 300% of the minimum payment amount to slowly whittle it down.
After a few months of not using the card and always paying more than the minimum on time, I got a letter warning me that my interest rate was going to jump from 19% to 24% if I didn’t “opt out” by sending a letter stating that I would never, ever use the card again. The letter gave me less than a week to get this letter delivered to them so I sent it via Certified Mail. I put the card in a box so that I would not even accidentally ever use it again.
The next month a mysterious charge for a mere $9.95 appeared on my bill along with my rate jumping to 28%. I tracked down the company that had made this charge to my account and called them up. They claimed to be a web service provider in another state, quickly agreed that there had been a mistake and said they would rescind their payment and notify BOA of the error. I never did get a straight answer on what service they might have provided for less than $10. I began to suspect that their service was given to BOA when BOA refused to lower my interest rate. I, after all, had not used the credit card and had, therefore, not violated my opt-out agreement. The conversation worked its way up to a supervisor level and pretty much ended with me screaming, “Close my account!”
My husband’s Capital One Visa interest rate was still at 12% and he had the available credit so we used one of those “checks” credit card companies provide and transferred the debt from BOA to C1. Of course, the following month, BOA sent me a bill for less than $40 for the interest that had accrued during the interval between my last statement and the day they processed my payment. I called them up and asked them to provide me with the exact amount I would need to pay to zero out my account, considering that once again there would be a delay between our conversation and the moment they finally posted my payment. I wrote the check and mailed it that day.
The next month, the BOA statement showed that they had underestimated the speed of the USPS and put a 50-cent CREDIT on my account. For this generous act, they charged me a $1.50 service fee, which meant I owed them one last dollar. I called and got one of the friendliest customer service reps I’ve ever encountered. When he brought my account up on his screen, he could not stop laughing. The tale of my one-dollar debt was going to make him the king of the break-room that day. He didn’t even need his supervisor’s permission to zero out my account. I told him, I wanted it printed out; I wanted that final statement with the big fat zero balance on it. He said I would have it and so I did. For all I know “forgiving” this dollar debt probably knocked a couple hundred points off of my credit score.
All of this occurred a few months back. Since then my husband stopped using his C1 card and started paying more than the minimum every month with the goal of us both being credit card debt-free. Last month, he ordered something over the internet and used the credit card since he was well under his limit and had no reason to suspect anything had changed. His bill this month revealed that his interest rate has doubled from 12% to 24%.
He called them up and demanded to know the explanation for this radical change in his credit-worthiness. He was told that he should have received a letter explaining that he could have “opted out” of this rate increase but since he didn’t reply there was nothing that could be done about it. He was yelling, “I got no such letter…” when the rep hung up on him. I’ll add that he’s never missed a payment, been late with a payment or paid less than the minimum. And since I’m the one who checks our mail, I’m pretty sure he didn’t get an “opt-out” letter because I would have brought it to his attention.
So the point of my sharing all of this is to open the floor to discussion. Feel free to share your stories about credit card company rip-off tactics. Or just vent your frustration with being on the hamster-wheel of endlessly escalating interest rates. If you know of legal ways to deal with these kinds of situations, I’d like to hear them. And, maybe, we should discuss starting a protest movement of some kind. How many people would be willing to take the credit score hit and the interest rate hike to just not pay their credit card bills in, say, December? Or, perhaps, we draft an “opt-out” letter to send to the credit card companies: Something along the lines of lower my rate to 12% or never see another dime from me as of January 1st, 2010… I dunno, what do you think?
Update: I realize that I wasn’t clear about the difference between the opt-out letter I received and the one that was supposedly sent to my husband. With mine, the deal was to promise, in writing, that you would never use your card again. (I still think that’s a very odd business stategy.) But, his was even stranger: He was required to promise that he would use the card again in order to maintain his interest rate. His failure to reply was then taken as a commitment to not use the card! As soon as he did use it, that set off the rate increase.