Even Wells Fargo CEO Powerless To Reduce Your Punitive APR

The APR on Kevin’s Wells Fargo credit card got jacked up from 9.6% to almost 23%. He owes $16,000. At 9.6, he could afford to make double the monthly payments, but now he’s paying $300+ a month in finance charges alone. He’s begged up and down the hierarchy, from the CEO to any exec or VP he could reach, to please reduce his APR so he can carry this debt. Nope. The numbers have spoken. The odds are calculated. Your risk has been assessed, and the verdict has been issued: you lose.

Kevin writes:

To whomever reads this,

My name is Kevin, and after racking up a large amount of debt on my credit card, my employer went out of business. At the time, and for even a year after, I could easily make twice the minimum payment, and was assured that my 9.6% APR would always be extended.

Fast-forward to today, after fighting for months about it, my APR is now almost 23% on a $16,000 balance. I emailed the CEO John Stumpf of Wells Fargo, and talked to every Senior Executive and Vice President I could to get it lowered. I was told that there is nothing that could be done. I have never missed a payment, been late, or paid anything less than almost double the minimum due. I was sent a letter in the mail stating that if I did not pay, then I would be taken to court. With my credit going from the low 800s to the sub-parking garage 300s because of the “refi” Bank of America is processing (for 14 months… and counting), I have no ability to apply for a new lower interest card to help get out of this mess.

I have paid over $4,500 in the last four months, draining my savings a lot to pay the card down. Roughly $2,000 of that went to finance charges. I have managed to pay off all but one other credit card, which is deferred interest for another year with $1000 balance, and cut my spending severley in the last eight months. But paying $300+ in interest a month is killing me. I have tried negotiating with Wells for a settlement amount, and they said they want $12,000 to settle (which isn’t really much less than I owe).

I am sure you hear this story a million times, but I just want some good advice on how to get rid of this balance. I am willing to sacrifice, I have been doing it for quite a while now.

Please, please let me know if I have any way out of this stress?

Thank you


That’s a tough pickle. Without knowing more about your income and expenses, it’s tough to say anything more helpful than increase income and reduce expenses. Maybe if you can get that refi expedited that will loosen up some cash or reduce your monthly mortgage payments, which can go towards the card. Do you also have a car you’re making payments on? Can you sell that? You might also want to give the free credit counselors at CredAbility.org a ping. They can give you actionable next steps to improve your situation.


Edit Your Comment

  1. dragonfire81 says:

    Seems like there is some story missing here. What kind of responses did he get from the execs? Just generic form letters or did any suggest a course of action for him?

  2. Commenter24 says:

    Perhaps a result of the CARD Act? Thanks Congress!

    • Randell says:

      Actually, if the CARD Act had been in existence when he used the money, he would be at that rate. Only FUTURE purchases on the card would be a the new rate. Thanks for playing.

      • dush says:

        Except the CARD act didn’t kick in right away. It gave the banks time to jack up rates in preparation for the act. That’s what sucked about it.

      • Commenter24 says:

        The fact the act was passed is still (likely) the reason his rate went up. Had Congress not meddled, his rate would have stayed lower until he screwed up.

        • davidc says:

          Ahh … no. CC companies were jacking up rates willy-nilly long before the Card Act was passed. You see there was this little thing … maybe you noticed it .. .the economy, it crashed, and all the money people’s starting trying to figure how to .. well .. make more money.

          Lo and Behold, customers with high limits and low credit scores SOMEHOW seemed like a good place for the banks to make more money. This is WHY the Card Act finally got passed. It wasn’t the other way around.

          • frank64 says:

            Your right! A large part of the reason for the card act was the rates being jacked. The card act is helping people.

  3. DrWebster says:

    If his credit score is already in the 300’s, I’d say he should just file for bankruptcy…he doesn’t have much to lose at this point.

    • stebu says:

      I wouldn’t go so far as to file for bankruptcy (yet). Though at this point, it doesn’t sound like there are any downsides that he isn’t already experiencing to not paying any more money.

    • FDCPAGuy says:

      yes BK is a logical choice. I doubt BoA/BAC is processing a ‘refi’ for him… I bet it’s more of a modification. A refinance would not drop his scores into the 300s. He’s in some sort of financial hardship and he needs to take drastic measures to get out.

    • mac-phisto says:

      uhh…except his house.

      • womynist says:

        Isn’ your primary residence exempt from bankruptcy? I know retirement savings are (401k, etc.)

      • FDCPAGuy says:

        If your loan is near the value of the property you can simply exempt what equity you do have and re-affirm the home. If the OP is undergoing a loan modification he might not have any equity anyhow.

      • sonneillon says:

        He can do the lesser bankruptcy too. Chapter 13 would be helpful in this case because it will allow him to pay off some of the debt and walk away and he doesn’t risk as much as a chapter 7.

  4. [MG]LooseCannon says:

    “and was assured that my 9.6% APR would always be extended. “

    So the 9.6% was a special offer that ended, rather than be extended. Sounds like this is a good lesson in being sure to read the terms of the offer.

    Add to that what sounds like a bad choice in home loans (the BoA re-fi comment) and it sounds like some poor choices are catching up.

    I think I might be talking to a bankruptcy lawyer, just to see what the ramifications are.

    • Fineous K. Douchenstein says:

      I hope you realize that some of us that have had our APR jacked up for no reason in the last year were people who previously had a fixed APR that wasn’t a special offer or promotion. I’ve had one card for several years at a 7.9% fixed rate that was bumped to an adjusted rate that ended up around 16.9% for no reason whatsoever.

      Granted, I don’t particularly care what the APR on my cards are because they’re paid off every month, but the assumption made in your comment needed to be addressed.

      • RxDude says:

        Yep – my Capital One card went from 5.9% fixed to 15.9%. Luckily for me I got a fluke tax return this year, so they are getting 15.9% of $0 instead of 5.9% of what the balance was.

  5. Tim says:

    I know the OP’s credit is likely a mess, but is there a chance he could get another card with a lower rate and do a balance transfer? Or, if he has any old cards he’s not using, could he balance transfer to those?

    • Nigerian prince looking for business partner says:

      I doubt he’d be able to get even a secured credit card if his FICO is in the 300’s.

  6. smo0 says:

    This is horrible. I always saw this type of thing and at Citi I was powerless to do it. It’s all about access rights – usually someone in management has the rights to manually adjust interest rates. And even if the SVP or CEO cannot physically do anything (that’s usually a low-level-monkey job) they can always TELL that person to adjust the rates. This guy is getting the big time blow off. I’d take this thing to the “news.” Contact CNN or something….

    On that note, I was with Wells Fargo ONCE – back in 1999/2000. I closed my account with them after crap like this went down. I had my first credit card with them as well. One of the worst.
    I will never bank with them again.

  7. Thyme for an edit button says:

    Are there sites where one can find phone numbers for legitimate, non-profit credit counseling services? Maybe they can help.

  8. n0th1ng says:

    rule 1. Don’t rack up a lot of charges on your credit card. The companies can screw you over anytime for any reason. A low APR is not a license to spend money you don’t have.

    • Cameraman says:

      I used my credit cards to buy groceries, for many months. Screwed my credit something fierce, but I kept eating. Too bad you weren’t around to tell me how silly I was, and that starving would be preferable to a bad credit score.

      • chiieddy says:

        It’s that sort of situation that public assistance programs exist for. It takes a lot to swallow your pride and take food stamps, and you probably would still have had to run up debt (it’s one of those unfortunate side-effects for being in desperate need), but it would have eased the pain, just a little.

        I’ve always been surprised on how little it takes to go from solvent to needing public assistance within a month or two, but it happens.

        • Etoiles says:

          There’s an income level where you can be ineligible for food stamps but not able to afford groceries. I was there. Paid off my CC balance last year, thanks to drastically improved life and employment circumstances.

          (Had to go to the ER while uninsured during that time, too. Worst couple of years of my life, knock on wood.)

      • Elcheecho says:

        or, i don’t know, eat less.

      • davidc says:

        It was your choice to screw up your credit. Actually, it was probably the choices you made long before that caused your problems. You already know this … your just not willing to take personal responsibility for your actions.

        Hence you make this post cause trying to somehow make people believe that this kid was probably wronged in some way and we should feel sorry for him … and ergo, you get some form of absolution for your transgressions. amirite?

        How about we quit being a nanny-society and stop absolving people that make selfish / stupid decisions? Maybe if we, as a society, stopped doing this, then people would not get the funny notion that it’s OK for them to be a blight on society?

        It’s just a thought …

  9. Sneeje says:

    While it would be wonderful if the bank would work with him, and I even think that they should be forced to, why is the discussion not centering around who created the problem in the first place?

    Yes, BINGO!, for those of you playing.

    People need to consider the potential future consequences of putting themselves under the burden of significant debt and then be willing to alter their lifestyle (even dramatically) to address those consequences.

    • Tim says:

      I think the conversation isn’t centered around that because that’s not going to help anyone or anything.

      • Dover says:

        Like that has stopped Consumerist commenters in the past…

      • Sneeje says:

        Sorry, disagree, my second post above is in the wrong place (my fault). It certainly is helpful to consider how people put themselves in positions where they CAN be screwed by banks. Banks should be held accountable certainly, but it wouldn’t be as lucrative if people were more responsible to begin with.

    • Randell says:

      Actually, the problem would not happen with the CARD Act. He took out a loan at 9.6%. The bank decided to raise that rate to 23%. That is the complaint. THe CARD Act would force the lender to honor the rate he actually utilized with the card. Anything new would be subject to the new rate.

      • Sneeje says:

        Ok, we’ll just keep on arguing about the symptoms, not the real problem–>Banks can’t screw you if you use debt sparingly.

        Said another way, the OP chose to put himself at risk. So we can blame and attack the banks for predatory practices as we should, but there also seems to be this attitude of: “I can do whatever I want and play the victim when consequences happen.”

        If you walk into the worst part of town at 3am and get mugged or worse, the perpetrator should absolutely go to jail, but if you are asking “Why me?” you kind of have to look in the mirror.

  10. sirwired says:

    For what reason was the penalty rate imposed? If it was because of a credit score change, the OP certainly would have had the opportunity to reject the change by closing the account (and paying off the balance on the original terms.)

  11. mac-phisto says:

    well, that sucks. they’re likely not helping b/c he is paying on time (& it appears more than the minimum balance).

    i’ve been in a similar situation before – you know what helped? i stopped paying the card. i answered the phone every time they called & when the question was “why aren’t you paying?” the answer was “i can’t afford the payment.” no one was willing to help until i got to right about the 5-month mark (banks have to charge-off debt that hasn’t received a payment for 180-days – that’s the law). all of a sudden, the tune changed. the settlement offered was 1/3 of the balance, they offered a short-term reduction of payments – i talked them into fixed payments for 5 years at 5.99% & a reversal of the late payment fees that i had incurred (didn’t get the interest back though). after 3-months of on-time payments, they changed my payment status to “on-time”.

    i don’t know that i would do anything with a refi in the works (you may blow that opportunity), but just remember that the power lies in the payment. as long as you’re paying, the bank assumes you have the ability to pay. the closer they get to charging off the loan, the more power you have.

    • smo0 says:

      ^ This is true. Citi did this all of the time.

    • webweazel says:

      This is exactly what I was thinking. If your credit score is really already in the toilet, you’ve actually got more power on your side at this point.
      When they call you, state matter-of-factly that with the high interest rate change, you cannot afford to pay it. Period. Tell them you WERE able to afford to pay it at the old interest rate, as their records will show, but with THEIR change, you cannot any more. Since you cannot afford even their minimum payment, you are putting your money to work elsewhere, and will pay nothing more towards the debt without changes. Tell them you’re looking into bankruptcy. Let them know in no uncertain terms that if they don’t work with you, they’ll have a $16,000 loss on their books. I bet they’ll change their tune pretty quickly.

      • mac-phisto says:

        i’d be careful about dropping the b-word. that tends to get the account marked “legal” & you won’t get anywhere.

    • gman863 says:

      If you quit paying, it will torpedo your credit score. Do this only if you are really in bad shape. It’s better to keep your mortgage and car payments current to avoid foreclosure or a repo.

      If your credit is still halfway decent (no late payments), ask your bank or credit union about an unsecured loan to pay off the balance if you agree to close the high-rate account(s) it will be used to pay off.

      Finally, when making a settlement offer on seriously past-due credit card accounts, some banks will only play ball if you can come up with a single lump-sum payment. I have a friend who hasn’t paid Chase in over four months. They offered her $3,000 on an $8,000+ balance but only if she could pay the $3,000 all at once.

  12. XianZhuXuande says:

    You don’t got from 800 to 300s because of a ‘refi Bank of America is processing’. It takes a special kind of screwup, and multiple at that, to go from 800 to 300s. If this is true, this person has collections and more.

    • DanRydell says:

      Yeah, I don’t believe that for a second.

      • FDCPAGuy says:

        and nor do I. Chances are he went 90+ days late on the mtg or is in a partial payment agreement. Then Wells did an acct review and saw his credit sucked, jacking his rate to where it currently is now.

        • Tom Foolery says:

          If it’s a modification and not a refi, that might do it…especially if the OP is one of those on the Home Affordable program who’s been making a trial payment for months…

  13. wackydan says:

    His debt… his fault. Unless he had to buy a kidney with that credit card of course.

    So he runs up debt, can’t pay it off, yet live comfortably enough, and doesn’t like when the bank doesn’t make him a good enough offer on reduction of rate or principle?

    Seriously…. No pity for him from me.

    • jtheletter says:

      “I have paid over $4,500 in the last four months, draining my savings a lot to pay the card down. Roughly $2,000 of that went to finance charges. I have managed to pay off all but one other credit card, which is deferred interest for another year with $1000 balance, and cut my spending severley in the last eight months.”

      You’re right, sounds like this guy has been living high on the hog for the last 8 months…. oh wait.

      • wackydan says:

        No… But he has mismanaged his finances. He expects them to wipe more from his card than they are willing to do. The fact that he has paid $4500 in monthly billing out of his savings means absolutely nothing. He wants a partially free ride for what?

  14. Thresher says:

    Doesn’t seem to make a lot of sense to jack up the rate on somebody who is making their payments to a level where those payments are no longer certain.

    Seems that banks don’t evaluate the risk of default for raising the rate when they make the decision to raise someone’s rate because of risk.

  15. eggy101 says:

    I would enroll in a debt management plan (DMP) as soon as possible, that’s what I did as soon as my rates started being jacked up. All of my cards were lowered to 14% or lower (most less than 10%). They will negotiate with the creditor to get your rate down in exchange for a fixed payment each month. It may be higher than your “minimum” but you’ll be paying much more towards principal.

    Most programs charge a token monthly fee, but you will still save a great deal. You’ll have to close the account and hold off on applying for new credit cards for awhile, but in your situation that sounds like that’s not a bad idea anyway.

    Good luck.

  16. agraham999 says:

    As good customers with not too much debt…we saw three of our cards increase their APR…one from 16% to 30%…and recently to 30.08% even though we never missed a payment and the balance is low. Wells Fargo…which is our bank as well…jumped from 12% to around 19%…again we don’t miss payments and in fact that card carries no balance and we keep all our money there.

    The only cards that haven’t pulled some crap on us is Amex and Chase…

  17. Randell says:

    Talk to a BK attorney ASAP. Do not hesitate. Either a Chapter 7 or 13 will likely make a lower rate (the judge can order a lower rate in a 13 to make it doable). I do question the refi that is 14 months in the making. The BK lawyer can help you on this as well. Your house can not be foreclosed on when you are in BK. If you are behind on the mortgage they can roll the past due into the Ch 13. So if you are 10,000 behind and you opt for a 36 month CH 13, it will be extra added to your mortgage payment.
    Most BK lawyers will give advice free. Take your past two years tax returns and most recent pay stubs. Figure out ALL your expenses including gas, food, utilities, clothes, cable, car repair, dry cleaning, entertainment. Once they punch the numbers in, they can determine a proper course of action.

  18. Town Drunk says:

    As someone who has seen over $50k on the credit cards at one point with one card being randomly increased to 28% APR for no reason (thanks Chase), I understand the OP’s feeling of helplessness. However, the debt is still his responsibility. I am always floored by people suggesting that others declare bankrupcy or call the news. It’s debt. It’s money you owe because you spent it on food / diapers / hookers / whatever and you are financially and morally obligated to give the money back to the person or company that you got it from to begin with.
    The thing that bothers me the most is “I have paid over $4,500 in the last four months, draining my savings a lot to pay the card down”.
    How can someone have any money in savings and not pay off the card? It seems like the payments toward interest on the cards far outweigh the interest one would get from savings.

  19. jrwn says:

    Do what I did. Go to a credit union and get a personal loan. I was able to get one with an APR of less then 5%.

    • Alessar says:

      This is a good idea.

      Another option when your APR is randomly doubled on you (assuming we’re not talking about a promotional rate being canceled) is decline the change in terms, and close your account, locking your balance in at the old rate and allowing you to continue to pay it down. It might affect your credit score very very slightly but in the greater scheme of things? Who cares!

    • AnonymousCoward says:

      I agree, he should try this, but unlike banks, credit unions usually care who they lend money to. With credit scores in the 300’s, he’s likely to get turned down.

    • Nigerian prince looking for business partner says:

      Did you have a FICO in the 300s?

  20. Not Given says:

    Stop paying the card or pay a token amount every month, save up every cent you can, sell everything you can, mow yards, whatever you can do to build up a substantial amount of money. In 5 or 6 months offer to settle (right before they charge the account off and sell it,) make sure you get a written contract that says the account will be paid in full for $x, they will delete the trade line from any and all credit reports and that they won’t sell the difference forgiven to another company. If it helps, ask how much they will collect from a debt buyer if you don’t come to terms. You will owe income tax on the difference. If that doesn’t work, keep saving and offer the same deal to the scumbag debt buyer, doubly especially make sure it is in writing. With the scumbag start your offer at 10% and negotiate. The debt buyer will not have paid the full amount to the credit card company. When you do send the money, make it a money order or cashiers check and send it CMRRR after you have the contract in hand and have checked it out with an attorney.

  21. chenry says:

    I have no suggestions, just hope you can figure something out. 23% APR is insane. It sounds like they want your house.

  22. Nigerian prince looking for business partner says:

    I highly recommend that the OP Google “Pay for Delete” or “PFD” and read through the example letters. It can be a bit of a long shot but if you can come up with a lump sum payment for 1/3 to 1/2 of the debt amount, in some instances it is possible to pay off the debt obligations, while repairing the damage to your credit report. He’d still be on the hook for taxes on the difference but it can make life much more pleasant.

  23. Extended-Warranty says:

    Can we help this person? Most likely not.

    Can we teach everyone else a lesson? Yes.

    Do not borrow $16,000 or any other amount that you cannot afford. No one will have sympathy for you. I’d like to hear how “necessary” charging this much was.

    It seems to me as if this person tried their best to avoid the topic of them missing payments. Did they miss them in the first place to get to 23%? Did they attempt to refi with anyone else before the credit score tumbled to 300? If you had a score of 800, it shouldn’t have been an issue to refi with any bank of your choosing.

    You think the CARD act is helping anyone? This is a direct result of the card act. Banks just have to find alternate avenues to make money.

    • consumerfan says:

      Read the article. He racked up the debt. His employer went out of business. He was paying regularly but only twice the minimum balance. Carrying that balance is not a good idea even in the best of times.

      However, the CARD act would protect anyone in the OP’s circumstances from having their rates jacked.

      We can only assume that the rate hikes predate the CARD act.

  24. peebozi says:

    the free market should work itself out on this one. if you disagree, please answer this simple question: why do you hate america?

  25. SuperNinjaâ„¢ says:

    Kevin, this is going to sound like a plug, but so be it. Go visit the Dave Ramsey web site. Finding out about Dave Ramsey was the best thing that ever resulted from my reading The Consumerist.


    There, you’ll find not only hope, but a solid plan for eliminating debt forever. FYI he does attach a christian spin to his advice, but it is not overly preachy or bible-thumping. There are points to disagree with, but I believe that on the whole, he is what many Americans need. The saddest thing is that they don’t even know they need some help.

    I don’t really go to his site much anymore now that we’re debt-free, and financially healthy.

  26. fesak454 says:

    I had a similar experience with Wells Fargo — I went all the way up the ladder, just to be told over and over again that they couldn’t do anything about it. I sold my car and paid off the card, then moved my banking elsewhere. I simply wanted to reduce my debt load and tried to negotiate a lower interest rate with them. They were my highest at over 18%. Unfortunately I don’t really have anything good to say about Wells Fargo.

  27. crb042 says:

    I don’t get it. If they’re willing to settle for a reduction on the amount from $16k to $12k, then what’s so different keeping them from reducing the interest rate and getting that lesser amount while aiding their customer in repaying?

  28. sopmodm14 says:

    of course theres nothing that can be done…b/c you’re filling up the corporations pockets

    you’d figure that when a record of on-time payments, they could shave the rate a little

  29. WickedCrispy says:

    Yep. l2bankruptcy and screw ’em!

  30. WickedCrispy says:

    Yep. l2bankruptcy and screw ’em!

  31. terminationshok says:

    Can anyone here explain whether the practice of jacking up the rate on outstanding balances is legal?

    15 U.S.C. § 1666i–1 (a) “In general
    In the case of any credit card account under an open end consumer credit plan, no creditor may increase any annual percentage rate, fee, or finance charge applicable to any outstanding balance, except as permitted under subsection (b).”

    The exceptions don’t seem relevant here. But you can check the full text here:

    What can I do if my credit card company is breaking this law?

  32. pot_roast says:

    “With my credit going from the low 800s to the sub-parking garage 300s because of the “refi” Bank of America is processing”

    And he’s paying the CC on time. Why on earth would his FICO score drop like 500 points like that? I hate the whole FICO system, and this is part of it.

    Also, I think there’s a lot more to this story that we’re not hearing…

  33. sea0tter12 says:

    Stop paying on your credit card. Your credit is already in the toilet, so it won’t hurt much. They jacked my rate up, and they weren’t willing to work with me when I called to tell them I couldn’t pay that high any more as my husband had lost his job, and we had barely been paying what it was before. So I stopped paying. A few months later, they were miraculously willing to work with me, to the tune of letting me pay it off by paying only 50% of what I owed. My credit took a ding, but we were able to get rid of the debt in the end.

  34. Drunet says:

    I can understand 1k in CC debt but to have 16k floating out there on a card and knowing you could not pay that off in a few months time is plain stupid. Don’t spend what you don’t have.

  35. tt7001 says:

    Here is what I don’t understand. These banks are unwilling to work with customers until a customer is 30, 60, 90+ days late and their credit is shot.

    My friend had a student loan that was in deferment and when she left school, they, as agreed at the time of account opening sent her a bill which she couldn’t afford to pay. It wasn’t until she was 90+ days past due on the loan that they finally agreed to lower the minimum monthly payment amount and help her out.

    Another thing, these people who are writing with no sympathy; not everyone is as privileged as you; people make mistakes with their credit and make decisions that aren’t always good ones.

    As to the OP of this, file bankruptcy. —Screw them— PERIOD. You tried to work with them and they declined. Now they can write it off and suffer.

    I know a lot of people won’t like my post, but too bad. The fact of the matter is these banks are greedy and I’m sick of it. With these types of practices, defaults will only get higher!