Question for credit card experts or legal eagles...we're outraged.

[Blue_In_AK]

My husband has a Capital One Mastercard which he's had for at least 10 years, maybe closer to 15, at a fixed rate of 9.9%. He has never missed a payment, never been a day late, never gone over limit, in all that time. He just received notice from them that as of September 1st, they are switching to a VARIABLE rate of 15.9%, not only on new charges, but on old balances, as well. Is this at all legal? When you acquire a credit card, isn't that some kind of contract that THEY have obligations under, too? Don't they have an obligation to keep a fixed rate fixed? And how in the world can they back-charge you an additional 6% on charges that you accrued at the lower rate?

Does anybody have any inside info on this? Was that part of that hideous bankruptcy and credit legislation that happened a while back? I've never heard of such a thing. I could see it (maybe) if they were raising the rate for future purchases, but it seems completely illegal to make it retroactive. I said it's kind of like if someone gets sentenced to four years in prison for a crime, in the middle of their term a new mandatory minimum is set at 6 years, and so now all the guys who thought they were doing 4 get two more years tacked on. Like double jeopardy or something.

Thoughts?

[supernova]

1. They are free to change the rate

at any time, provided that they give you advanced notice in writing. I think the law is 30 days.

Sorry.

Your recourse is to:

1) Find another lower rate card. With your credit history, shouldnt be too much of a problem.

2) Call and haggle with them. Negotiate. Threaten to replace Capital One with other card. Perhaps they will forgo the new rate for you.


edit: It's for this and so many other reasons, I only have my checkcard from my brokerage account. I don't want any other card. Not even a store card.

[LaurenG]

2. No info for you but I recently got a notice from Bank of America

formerly MBNA who informed me that they were raising my interest rate to 27.9 and if I disagreed with this I would not be able to ever use my card again. I wrote them and told them I didn't accept their new rate and I wouldn't be using their card again and that I'd let everyone know what kind of business they conduct. BTW, I have never been late with a payment and have also done business with them for over 10 years.

[driver8]

3. Capital One is the worst!

Who knows what's legal with these credit card companies anymore? They seem to make shit up as they go along.

I had a $114.00 minimum payment on my Capital One and sent them $100.00 by mistake. They charged me a $40.00 late fee and when I called them, they said that since my payment was not a full payment that there was nothing they could do. I told them "well, there's something I can do...I can get rid of your shitty credit card."

I had been a Capital One customer for about 10 years and I think I was late on one payment the whole time. Fuck them -- there are plenty of other credit cards available...you don't need to put up with their crap.

[3waygeek]

11. They're certainly persistent...

I get several offers a week from them -- three seperate ones in Monday's mail alone.

[mcscajun]

4. Nothing new AFAIK, certainly nothing illegal. Credit card companies have done this

for decades. They can change the terms so long as they abide by all Federal regulations, and the regulations of whatever State in which they have incorporated. Check the fine print; there is usually an opt-out that involves ceasing to use the card and notifying them you are closing the credit line. In that case, you are entitled to pay off the existing balance, and the existing balance only, under the old rate. But you must do these three things: Stop charging on the card before the deadline date, notify the lender you are doing so, and cut up the card.

If you charge even one item on the card (or take a cash advance), that is considered acceptance of the new terms, and you're stuck with the new terms on both new and existing balances.

Bottom line: Read the fine print, all the way through. If there's no way out, then it's time to get another card with better terms, and transfer the balance from the other card.

Good luck. The Banks Stack the Deck. All the time.

[Blue_In_AK]

8. Thanks...

We do have that fine print you're talking about, so he's going to call and cancel the card right now. He can get a VISA with a fixed rate quite a bit lower than this 15.9 through our credit union, so that's the plan.

Thank you all for your responses. To say we were shocked by this HUGE jump and the fixed/variable thing is an understatement. This is why I only have one credit card, too. :) And through the above-mentioned credit union which has treated me great for 30 years.

[shireen]

16. Don't cancel the Capital One card!

Move the balances to another card with lower APR. But keep the shitty Capital One card (if there's no annual fee) because it will help boost your FICO score. A chunk of that score is determined by your credit to debt ratio. If you get a new credit card, that increases your collective line of credit, so you credit/debt ratio becomes larger, and that will increase your FICO.

[Blue_In_AK]

18. I think we're okay in that regard

because we've retired a couple of other cards. My husband currently only has two and one of them doesn't have a balance.

[Big Blue Marble]

5. Sadly undercurrent laws, the credit card companies can

do pretty much what they want. It is all legal. They can change your rate
any time they want and on past balances too. It has nothing to do with
the bankruptcy law of 2 years ago. They have been out of control for all
the years, the repubs. controlled congress.

Read the very tiny print in those little fillers
they put in your statement envelope. Your only option if you do not like
their polices, is to switch cards. Whoops! They are pretty much the same.
But if your credit is really good, you may do better with another company.
I have heard that Capital One is one of the worst.

Also consider talking to your bank or credit union. If you
explain that you want to pay this balance off over time. They
should be able to give you a loan with a lower rate, even
as a signature loan (no collateral.) An equity loan would have
an even lower rate.

There maybe hope on the horizon to reign in the all powerful cc companies soon.
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=389x1487063

[PetrusMonsFormicarum]

6. Switch cards!

Find another card that transfers balances at a low APR (for the life of the balance--important!). Transfer the balance, then call Capitol One, cancel your card, and when they ask why (they will), explain that you found a better rate. If they say they can match the competitor's rate, ask if they can beat it. If they can't, take great pleasure in telling them to go solitarily practice the biological imperative!

There is NO reason to have brand loyalty among credit predators--uh, providers. Unfortunately, this is legal, and is basically the credit companies' response to the overwhelming number of credit holders who regularly switch cards.

If hubby wants to keep his account (for whatever reason), he should at least call a customer service rep and ask for the old rate (you have to ask! It doesn't hurt!). At best, they'll keep him at the old rate. At worst, they may offer to freeze the account from any further purchases and allow hubby to pay down the balance at the old rate.

[shireen]

17. don't cancel Cap. One, see post #16. nt

[JAYJDF]

7. Same thing happend to me. I believe Chase bank is the worse.

You can read on the internet all the ways and times Chase has screwed people.

I do believe you can refuse the increase but just can't use your card again.

Chase raised our rate to just over 27%.
Bank of America I guess realized that and they did the same.
Not much recourse.
They are like vultures!

[Dr.Phool]

9. They can do whatever the hell they want.

I had a Chase card at prime rate for over 10 years and was never late on a payment. I also had a mortgage for over 10 years, and again,ever late.

I got called out of town for 10 days on an emergency, and thought I had all the bills paid. I missed the Chase card, and when I returned I was 3 days late with the payment. They jacked my interest up to 29.9%. I called to complain, and they said the best they could give me was 27.9%. I said, "fuck off", and transfered the balance.

Credit card companies are the only entities in Amerika that can change the terms of a contract, at will, after the fact.

[Big Blue Marble]

10. And by accepting these cards you sign away your legal rights as well.

You cannot take a credit company to court. By using the card, you agree to binding arbitration to settle any
dispute with the credit card company. And they will pick the arbitrator!

[Sanctified]

12. Yeah they can do that the upside is you can transfer the balance to another company.

Unless they do what some credit companies are doing which is to say you can't pay your balance with credit only cash.

[Prisoner_Number_Six]

13. If I can't pay for it with cash on hand, I don't buy it. EVER.

I got rid of all my credit cards years ago. Credit is a trap that sooner or later gets everyone who uses it.

It's nothing but a gigantic scam. My advice is to pay it off and ditch it.

[pinniped]

14. Don't mess with any HSBC (Direct Merchants Bank) cards either.

They jacked me up from 11.XX% to around 16% for whatever reason.

I only owe these bastards around fifty bucks more due to a balance transfer to a card with a lower rate.

Eventually, I will rid myself of all these bastards.

[Deja Q]

15. Bank of America had a terrific repayment plan... if you're in credit counseling.

They put the interest rate to 0% on the provision you never once make a late payment.

They're not the best card company to consider, and credit counseling isn't keen either, but I can think of far worse things.

[alarimer]

19. I got the same thing.

You can decline the changes. What happens then is that your account will be frozen until you pay it off (at the 9.99% rate) and then canceled. I am going to do that. Fuck them.

[Blue_In_AK]

20. That's what we decided to do.

It's really quite liberating actually. They're even going to send him a check for $125 for cashing in his "points." :)