Hit With A Credit Card Rate Hike? Try Freezing The Account
Rosemary writes that Bank of America just increased the interest rates on her two credit cards by 12% and 15% because the balances were too high, after slashing the credit limits on both cards a month before. She's frustrated, of course, but like everyone else who's been hit with these increasing fees, she's sort of stuck with their decision. But Mary Schwager at Examiner.com suggests you try placing your account on hold for six months or so, at which point your creditor may be less terrified of the economy and willing to work with you.
Here's what happened when she called her creditor to protest a rate increase:
So I requested a supervisor. When she finally came to the phone she rattled off the same thing, but gave me a third option. "Opt out of the rate increase, keep your current lower interest rate but don't close the card, just don't use it." (Closing a credit card may ding your credit rating a bit.) She said to call back in 6 months and perhaps the "economic climate" would be better and I could get a lower interest rate. Basically saying, the bank is pretty much up the creek right now, but they are hopeful things will turn around. I chose option #3 "hope".
Think of it as temporarily closing your account, but without suffering the credit score ding that really closing it will bring.
This only works if you stop using your card, which means you'd better double-check that all automatic monthly debits against it are turned off. Otherwise the first charge that hits after you opt out will opt you right back in at the higher rate.
"New idea to fight credit card interest rate hikes: put your card on hold" [Examiner.com]
(Photo: dave_7)
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Didn't the current President run on a campaign of Hope and Change? I guess the plan is to hope that things change.
@SonaliHamlegs: ICHC is on the fritz. They're implementing some "upgrades," so there will be few new lolcats for awhile.
So to do this with BOA, you just call them and ask to "freeze" the account for six months?? Or is this something you have to wait until your 3rd or 4th person you talk to offers it to you?
Of course, if everybody pares down the number of cards they carry, it might send an effective message to Wilmington to stop squeezing their best customers.
@geoffhazel:
I know I shouldn't feed you...
But honestly, do you just google hope and/or change all day waiting to unleash your rapier wit on the blogosphere?
Bank of America won't let you just call and have your account put on hold. You have to write them and mail the letter to them telling them that you do not accept the rate increase and then they will put your card on hold. Indefinitely. You can't use the card again. And you have to send the letter in before the deadline that they set.
My deadline was 2 weeks after I got the letter that the were raising my rates from 7.99 to 14.48%.
if you opt-out your account will be closed when the card expires.
@geoffhazel: At his rate of getting items accomplished, we'll be lucky to have any Change to buy some Hope with...
I just spoke with BoA this week when they tried to raise my APR from 10% to 21%. My notice gave me the option to write or call, so I called. The conversation was brief, and the CSR was very nice and helpful. My APR is frozen at 10% and will remain that way unless I make a purchase with that card (at which point it reverts to 21%). I was shocked how easy this was.
@LuzioFantazmic: That's incorrect. The same letter should have included a phone number (mine did) to call to decline the hike, which is exactly what I did. I then cut up both of my cards. I wanted to pay it off anyway.
@Brawndo_The_Thirst_Mutliator: At this blistering rate of 10 weeks? I wish everything could change over night but it cannot.
My rate would have gone from 5% to 11%. When I called to verify my options I was basically told it was my fault for not having perfect credit. I didn't bother reminding the guy that my rate has consistently gone DOWN for the last two years because my credit has consistently improved, I've always paid on time and have not gone over the limit in over two years. Once he verified I could take the hike or stop using the card I hung up on him.
I would like to see anything in writing that says when the card expires they'll close the account. Nothing I got said that.
@avantartist: No, only Shittybank was doing that. I assume this post is a response to Bankkk of Amerikkka's recent ratejacking spree
I did this with my Chase card last year. Now my statement each month says my account is closed, but it also shows available credit. And this year they again tried to raise the interest rate--on a closed account. I opted out yet again. Not sure if my account is closed or not if I have available credit.
Just curious : How did/does the president have anything,anything at all, to do with what BOA charges for their credit cards ?
Is your life so empty,so balanced on the razors edge,that you look to Washington for every percieved slight,every problem to be solved ? I mean,after 28 years of (mostly) Republican deregulation, it should be obviou that our economy is sick. And it's not going to get any better by sniping at the president from the tall grass.He's not my personal first choice for the job,but I will just come out and say that I think he is doing fine (but,it's still early).
Another thing that I will come out and say:The right would love nothing better than for BOA type companies to wipe their feet with average Americans because they are "pro business".
Perhaps the right doesn't understand that their unreasoned criticism turns away people that may just want the country to recover right now...
And we are trying to save these bastards lol
Let em fail - let em rot.
Consumerist : I think we've beaten this issue to death now.
If a credit card company raises your interest rate to a level you are not happy with, then simply decline the rate increase.
This is crazy, I just looked at my BOA account and they actually LOWERED my APR this month! And it's not even variable! How is that possible? And thank you! Bank of America FTW?
@Nix Smith:
Nope he is right, every card I have had where they change the terms (Discover just hit me with a rate hike, I'd close it but it is my oldest account by far), they require a letter to a specific address to opt out and close the account.
@Mad Dog McCree: This is possible because, as many many consumer articles have explained in recent months, the word 'fixed' when used by credit card companies means 'subject to change at our whim'.
My question is: Has anyone really figured out a pattern for how and when this happens? I have a card with B of A with a reasonable credit limit and I'm carrying a balance of about 25% of the credit limit. They have not changed my limit or interest rate, but I'm wondering if I should expect it? I don't have a stellar credit rating but it's above average (i.e. I can usually depend on qualifying for the lower interest rates available).
I did this when BofA hit me with that double-whammy.
They closed both my cards without my consent the following week.
@LuzioFantazmic:
Sorry, Nix is right, I got the same letter Saturday, and was able to opt out by phone.
@RonDiaz: I called to see if BoA could bring my rate back down (as they did last time I got a 20%+ hike letter), but this time they wouldn't budge. The CSR opted me out of the rate changes with no hesitation, no ink and paper required.
My easy fix-it for worries regarding interest rates: A) Don't use a credit card B) If you do- pay it off every month!
Heh. Just got a robo-call today "Attention this is an imporant notice by 'Visa and Mastercard' for their account holders (note the lack of a bank name). Your interest rates may be rising soon but arrangements can be made to give you fixed, low, rates! Blah Blah Blah Press 1 for a representative." Obvious phone-based phishing scam. I press 1, more just to waste their time than anything else and see exactly what they try to scam me out of my credit card number, SSN, whatever. Imagine my surprise that I get a "your call cannot be completed as dialed." Looks like somebody already got their phone lines unplugged for the scam, but they haven't tracked down the bot yet, which is still happily cold-calling marks.
SirWired
Even worse for me. I just got a notice as well, but they're raising my APR to a 24.75% based VARIABLE rate. I have excellent credit and almost no (less than $300)balance on a $7k card, and have been with BoA for 15 years. I've been disgusted with their business practices as of late, and was already considering cancelling all my accounts with them. This just clinches it.
You can also just try calling in and see if they'll cut your rate. Citibank raised my rate on one card from 13.49% up to 17.99%. They lowered it to 8.49%. Might have helped that I've had the card for nearly ten years, maybe not.
@deadandy: I don't think so.
I have two cards with Chase (only one was a chase originally, but they bought whatever other bank my other card was through), and opened a third (Marriott) chase card in November. The third one is used for business expenses, so it goes from almost maxed to almost paid off every month or so. I called in January to have them up the limit on that card, and they declined it (which I expected, but could really use a higher limit on it).
However, just last week I got a letter saying they were upping the limit on one of the other two cards (neither of which I'm currently spending on, but both have a higher usage rate of like 80%, but I am currently in the process of paying them down).
So I have no idea why they do what they do...
They jacked my rate from 9.92 to 25. I have opted out and once this recession is over, I will cut my business ties with BoA. I will not accept this treatment becuase of their bad decisions.
I had my Alumni BofA card hike the rate, so I promptly zeroed out my balance (I got lazy: bad!).
A couple months later, when I got my renewal card and spoke to a CS rep to activate it, they asked if I was happy with them (i.e., what happened to your floating balance and transactions). I told them and they dropped it back down to its original rate.
So, sometimes, there are multiple ways to skin a cat.
@Mr.DuckSauce: Instead of slinging insults, why not state your point and wait for a response? Try having a discussion.
@BritBoy: I'm not certain, but it's quite possible that Consumerist allows new people in to read their articles. Who, perhaps, haven't read older stories?
@lawnmowerdeth:
Yeah, so was I; I'll probably send them a letter just in case though. I had an insanely low rate and I just put a computer on it that I planned on paying off in 6 months. The rate they offered is lower than what a lot of people have but still, the only reason I charged it was because of the rate.
I said, okay, fine. If you want to up my rate, I won't use your card! Ha ha! (insert Sherman Muntz)
@Nix Smith: Same thing here, they wanted to up mine from 3.25% to 9%. I opted out and am not planning on using the card until the balance is gone. I don't like those things anyway.
@lawnmowerdeth: I would follow up with a letter (registered return receipt) since we all know the credit card companies are so honest about keeping their terms...
@deadandy: I think they change the rates/limits when ever they do a sweep through their customer data and target certain profiles as not profitable or risky enough...
@Bigrobot: You are not profitable to them. You should have had maintained a $2500 balance on the card all the time.
@HurtsSoGood: I hope not.
BofA really needs your money... and I need BofA's Delaware Corporate Gross Receipts Tax to keep my real estate taxes low and my sales tax nonexistent!
@bilge: That's interesting. I closed an account with Citibank because they raised my rate from around 5% to 15%, and then said the lowest interest rate they could give me was 13.99%. I told them to stuff it, so I paid off the balance immediately (my plan was to pay it off over 2-3 months). --Wasn't about to give them anymore of my money after that.
I heard about this and I'm glad I don't have any more credit cards to pay. My Target card was close to 25%.
I would like to take this opportunity to reach out to those of you who might be on the fence regarding whether to get rid of your credit card(s). I did it last year, and I found it to be a liberating experience. I urge you to do so. An ATM/Debit card has the same function & protection. You don't need them. Get rid of them.
I now return you to your regularly scheduled surfing.
I thought we were promised more LOLcats?!?!