Credit crackdown -- is it hitting you?

[prolesunited]

I have an excellent credit score, generous credit lines and have always had some of the lowest interest rates, around 6% to 8%. I have a very nominal amount on a couple of cards and just haven't paid them off because I've been trying to conserve cash and was only paying like $1 or $2 interest, so it worked for me.

All of a sudden, I keep getting rate increase notices. The worst was a Discover, who wants to change the rate from fixed to variable, pinned to the prime rate. So, the interest rate will change from month to month but *starts* at 17%. I didn't have anything on the card but had charged some meds from the mail-order pharmacy to keep it active since it is my oldest card.

So, are they doing this to everyone or are they picking specific targets? I tend to have very low balances and pay things off fairly quickly. Do they just want to piss me off to get me to cancel all my cards?

I'll just pay everything off before these crazy rates kick in, but I know some people have too much and just can't do it.

So, why are they doing this now? It's just going to force more people into defaulting and they'll end up with nothing.

Has it hit you yet?

[aquart]

1. What is prime? Minus zero?

They do have a nerve, making us pay for their mistakes.

[robinlynne]

2. the unfortunate answer is because they can. and they are greedy mother-

f...ers. can I get some regulation?
Why isn't interest simply a fixed rate for everything? say to borrow, for example, you pay 4% everywhere, and to lend you can charge up to 5% everywhere.

[phantom power]

6. I think it might have to float with prime to be practical.

However, I don't see why we couldn't legislate a limit that floats with prime. At any given time, a credit card company can't let the rate drift higher than (prime+10)%, or something.

[Iris]

17. for now they can, but some of the more egregious rules that were re-written in the Bush admin

are going to be reversed. NPR reported a couple of months back how now the credit card companies are trying to suck as much out of their customers (or debtors) as they possibly can before the new rules go into effect.

[ixion]

3. yep, me too... same boat

my credit score is good / excellent, but I've had rate increases across the board and have had to close a couple accounts. My credit will suffer because of that, but I had no choice. They've jacked 'lifetime' 'fixed' rates by 5 to 10 percent.

[HillbillyBob]

4. They are doing it to everyone, B of A has not hit us yet,

but we have only 200$ on it and one with Tractor Supply for farm stuff, that is actually through Citi, which we have about 600$ I think, have to check with partner as I don't carry credit cards..too tempting.
This am on the local news there was something about B of A going to up rates and lower limits across the board. Since that one is only 500$ anyway, I told partner we should just pay it off and send them back the shreds of the card, he said that was the worst thing we could do for our credit rating. Frankly I think the fed should charge all those that got bailouts then turned around and took bonuses for failing their shareholders and we as customers under the AntiTrust and RICO laws.
Why should the thieves who caused this mess get rewards while the little shareholder has lost their retirement they have worked and scrimped for all their working lives.. Im lucky I got screwed out of my savings and retirement long ago. So the dog I had in the fight is long dead....

[safeinOhio]

5. Drop your big bank cards

You don't need a damn picture of your dog on it. You don't need to buy into their marketing. Go to your local, small bank, get a card with a much lower rate and be treated human.
Great credit here. Dropped my BofA 20% card and got a 5th 3rd card with 8.99%. Also have a Simmonds Bank card with the same rate.

[960]

32. Yes. That's what I'm doing. Closing all my old credit accounts and opened up a new CC

with my credit union.

[sinkingfeeling]

7. No, I just moved $10,000 from Lowe's to Citi with a fixed until paid rate of 3.9%.

[Iris]

16. I move some things as well at 0% and they keep wanting me to call them so they can give

me something else.

[prolesunited]

25. You can get low rates on the transfers

In fact, I've been getting more checks and offers to do so.

The thing is that the balances are so low that the fee for a transfer wouldn't be worth it. All told, it's less than $1,000 spread out on four or five cards.

[roamer65]

33. Be very careful of the "convience" checks offered by CC companies.

I called a few years back and had them removed from all of my credit card statements. They can be picked out of mailboxes and used in identity theft very easily.

CNBC had a special the other day on people who steal identities. One of their favorite tricks is to pick those checks out of mailboxes and use them. According to the special, there is a high correlation between meth addiction and identity theft. Many addicts use identity theft to get their next fix. Sad stories for all involved.

[JuniperLea]

8. Yep

Citi went from 9 percent to 24. They should all be hung.

[ProgressiveFool]

9. yep, just got the letter from BofA (Bunch of Assholes)

Saying they were moving from my fixed 8.99 to prime + 9 %, which means it would go to about 13 % give or take a few 10ths. This was apparently across the board, and not triggered in any way by my own credit, which is excellent. So I called up Discover to see about transferring the balance, and "discovered" that they plan on doing this as well, only I hadn't gotten the letter yet. Same rate: prime + 9 %. Apparently Chase did this a month ago or so, and it appears that most credit card companies will soon be following suit.

Isn't this price fixing and collusion, which is illegal?

Much as I'd like to cancel all of my cards in disgust, I shudder to think what damage that would do to my credit rating, which I have tried very hard to keep as good as it is.

[MilesColtrane]

13. I got the same letter last week.

I plan on rejecting the rate increase, getting a card from my credit union, and canceling all accounts with BofA.

(Really, taking my business away from them is something I should have done long ago, but I'm just lazy.)

[roamer65]

20. I'm the type BofA hates.

I charge on their card every so often and then pay it off immediately.

[ProgressiveFool]

28. that will be my new way going forward

but I did get caught with my pants down and a not insignificant balance. not too much, but more than I can pay off comfortably in a month or two.

[roamer65]

41. Good idea and use their card's credit limit to dilute your total credit utilization.

It will be a big plus for your credit score.

[AZ Criminal JD]

57. They don't hate you. Quite the opposite.

They are making money off the charges to the merchant you charged with. The fact you pay off immediately means they don't have to worry about collection costs and they get money to use. They would be in heaven if everyone was like you.

[prolesunited]

30. Yup

My husband and I were just talking about this. If you cancel the cards, your credit takes a big hit. And frankly, I'm in no position to pay cash for everything from now on, as nice at that sounds.

Your credit rate also impacts insurance rates as well as employment decisions. I just can't drop out, as nice at that may sound.

[dixiegrrrrl]

10. JP Morgan Chase Bank is being sued for bait and switch over CC offers.

They promise that if customers transfer balances from other cards, you got a low rate "for the life of the loan" .
"No gimmicks, no games, honest" said Chase.
Then in 3 mos. Chase tacked on fees and if you complained, they said you could switch your now transferred balance to a higher interest rate account with them.

Here are couple links to the issue, these are older stories, but I just heard about them.

http://blog.creditorweb.com/index.php/2009/02/12/chase-... /

http://www.milberg.com/page.aspx?pageid=5498

All that being said, we have one local bank card and one Citicard, and never carry a balance.

[roamer65]

40. Hate to say it, but I love my Chase CC.

I didn't transfer a balance, so I didn't have that problem. My card gets me "cash back" on every purchase. I hate to say it, but that card is better than using cash. However, I have been getting ready for them to increase my interest rate and have paid down the balance to a negligible level.

[progressoid]

11. Yep - even one we don't use ( MBNA)

We're looking for another option. Any suggestions?

[high density]

43. PenFed Credit Union Platinum Visa

Pros:

5% back on gas
2% back on groceries
1.25% back on everything else

Rewards are credited directly to the account balance when the statement is cut every month.

2.99% APR balance transfer promotion

Cons:

Stiff credit requirements. People with too many recent inquiries and lots of existing credit card debt need not apply

Getting a card requires joining the credit union. Anybody can join by donating $20 to the National Military Families Association and putting $5 into a share account.

Usually they require income verification by faxing in two of your most recent paystubs

Credit union website has an awkward design with generally poor navigation.

https://www.penfed.org/productsAndRates/creditCards/Rew...

[county worker]

12. Of course all those laid off people who are not able to pay the monthly payments

will get letters in the mail saying they are scumbag people of low moral character who don't pay their bills.

[KT2000]

14. Would someone tell me

WHY closing a credit card account should be bad for a person's credit rating?
That means that a person trying to avoid the once criminal tactics of the CC company, such as usary, is penalized if they don't want to participate anymore.
Also - it seems like prudent behavior to close credit accounts.
Anyone know the supposed justification for slamming one's credit rating for just closing an account?

[ProgressiveFool]

15. well, if it's a small account, no problem

The trouble is that a major component of your credit score is the amount of credit you have. So it's not closing the account itself that does it - it's the loss of whatever that account's credit limit was from your overall pool of credit available. For me, my BofA card is my card with the highest limit, so it would be damaging.

[KT2000]

19. Thank you for the answer

OK - I didn't even know that having a large credit pool was a good thing.

[Telly Savalas]

58. It's not so much the large credit pool but a low utilization that helps a credit score.

Say you carry a total of $450 in balances on cards with a total of $500 in credit limits. The credit scoring system looks at that and says "Sweet Jesus. This guy's maxing out his cards. He may default."

If however, you have that $450 balance and a credit limit of $10,000, then it looks like you're barely touching your credit. The fact that you have all this credit at your disposal but aren't using it suggests to the credit score model that you're in hunky dory financial shape and the probability of default is lower. Hence your credit score is higher even though you have the same amount of debt as in the previous scenario.

Unfortunately the credit scoring system is too crude to recognize that in most cases canceling a credit card (and hence increasing the utilization percentage) is in no way a sign that the default risk has increased.

[SoCalDem]

29. debt to credit ratio.. the more credit avaliable, the lower percentage of DTC

for instance.. you owe $1000, but have "open credit" of 20K.. that's 0.05

you close all accounts except for $5k-worth and the ratio becomes 0.20

[prolesunited]

31. Easy to understand explanation

Thanks

[quiller4]

53. Debt to available credit ratio changes.

Part of your credit rating is based on your debt to available credit ratio. When you reduce your available credit by closing an account you worsen that ratio and your rating goes down often by as much as 50 points. If you are planning to arrange car financing, closing an account could cause your application to be rejected or result in higher interest charges.

[roamer65]

18. Actually...I am cracking down on them.

Paying off remaining balances much faster. By the end of the year, my balances should be ZERO. I am cutting spending down to only essential items and I plan on keeping it there. I wanted a new car, but I'm not going to buy one until the present one truly dies. Then I may only buy a cheap used one.

I am aiming to be able to live on a unemployment check. It reminds me a lot of 1982 right now

I think we are in the Second Great Depression, people just don't realize it yet...as they didn't realize with the First GD in 1930.

[prolesunited]

38. I am living on unemployment right now

and it ain't easy.

The only thing I've charged are meds because it's hard to pay for them in one hit since I get a three-month mail order supply and they all seem to run out at once. But I always have them paid off by the next round.

[roamer65]

44. Sorry to hear that and I understand on the meds.

Bought two meds today and the friggin co-pay was 80 bucks. We need socialized medicine ASAP, so people don't hafta use CC's for meds or go bankrupt due to medical expenses.
Hang in there, man. We are all just a paycheck away from where you are right now. Hopefully things will improve soon.

[The Velveteen Ocelot]

21. They did it to me, too.

US Bank. I've had the card for years and years, always paid on time and always either the entire balance or at least way more than the minimum payment. But despite being a good customer for a long time I got a notice that they are raising my current, fairly low rate by about 5%. So I'm going to pay the damn thing off in full. I'll keep the account open so as not to hurt my credit score, but I won't use it again. Fuck 'em.

[xchrom]

22. i'm calling my rep and senator --

this shit is horrifying.

and it's fuckin criminal -- way to help the economy -- you fuckwads.

[X_Digger]

23. Nope, gave up CCs years ago.

We save, plan, then buy.

[roamer65]

24. Very simple little game they're playing.

1. Stick it to people who are hostage to credit card debit. They're going to make YOU pay for everyone else's defaults.
2. Discourage future use of the cards to preserve bank capital. But they want to do this without the outrage of outright card cancellation, so they are cranking interest rates up to and beyond early 1980's levels.

These tactics are actually going to make the recession WORSE and will back fire on them.

[populistdriven]

26. amazon visa lowered mine to prime plus 4.5% from 14 to keep me as a customer

I hardly ever used the card and my income and credit is nothing to be envious of

[pinniped]

27. I'd rather take the hit to the stupid credit rating BS than pay more interest....

to these banking assholes, so I did.

I closed 5 cards within the last few months.

I transferred the balances of 4 cards over to 2 new cards with low balance transfer rates.

There's no way I'm paying Crapital One +17.XX% when it used to be 7.XX%. I opted out and will continue to pay the 7.XX%.

I think the main thing these assholes want is to convert our low fixed rates to prime + whatever.

If Wells Fargo is playing this increase shit, it's no wonder they might be in for a 3 billion dollar profit.

Closed:
2 WAMU/Chase
2 HSBC Direct Merchants Bank
1 Crapital One

[SoCalDem]

34. I think you could write an explanation letter to be included in your credit report

saying that you were tired of being ripped off by unscrupulous "banksters", so you closed the accounts

[pinniped]

35. I do have to get financed for a car soon.

Thanks.

[roamer65]

37. I don't think you'll have much to worry about on buying a car.

They're going to get you financed just to get it off from the lot. GM, for example, is offering 0% for 60 months right now.

[Mike 03]

36. Lucky so far. Like you, I'm fortunate enough to have a very good credit score

and I almost always pay my entire credit card bills monthly.

To my amazement, my credit limits have been increased, but I was worried they would be cut. They cut my mother's, and she is just like me: Pays off entire bill every month, has a lifelong perfect credit score (if anything, she is better credit risk than me, because she has had a credit record for thirty years longer than I have!).

I don't comprehend what logic is going into the decisions that various credit card providers are making right now. It is bewildering.

[roamer65]

39. They have been increasing mine as well.

Trying to get me "hooked", but no luck on their part. I actually called BoA and asked them to freeze my credit limit a couple of years back. They soon ignored the request and up it went.

[Mike 03]

56. That's a great idea about asking to have your credit limit frozen.

The only reason I don't do that is because I'm afraid one day there will be an emergency where I might need to access up to my limit.

Isn't that strange that they are hiking limits on some folks?

[high density]

42. Got a rate increase notice from GE Money Bank (JC Penney card)

I don't carry balances and I hardly ever use the card so I couldn't care less.

Otherwise I haven't seen any differences. I did open two new cards recently after reports of lenders slashing credit limits.

[Political Heretic]

45. I reject all credit.

I used to be a credit American. But now, have no credit of any kind, I reject all credit cards. I would rather not get a loan for a home because I don't have enough "credit" history than play this rigged bullshit credit game or be a slave to "credit scores" and buy into this "Shutup. Consume. Buy. Die" America.

I'm quite happy living in the little communal house I live in with my best friend, his wife, and his cousin and partner. I pay him cash for my rent. I own my car, which sadly is a heap now due to a winter snow accident - but it runs. I don't NEED to buy into this credit bullshit game. And I hope to god that I never will again.

Going off the credit grid is the most liberating feeling I can describe.

[Political Heretic]

46. One clarification:

I have one leftover source of debt from before I rejected credit, and that are student loans, which I incurred before coming to the place where I am now in how I feel about credit, and that I obviously still have to pay back.

Those are my single debt, in exchange for which I have gotten an extremely good education (Masters). I'm ok with that.

[dixiegrrrrl]

49. I applaude you.

You are "walking the walk" and not just talking.
What would happen if enough of us did that???

[rufus dog]

47. I got my first call from Wells Fargo in almost a year.

Up until last June or July they were calling almost weekly trying to get me to use my Business line of credit. Yesterday they called and actually lowered the rate trying to get me to use the line.

[roamer65]

48. Hehe. Tell them you want to be "quantitatively eased" and...

you want some of those freshly created Federal Reserve Bernanke bucks at the same rate they got them...0% percent.

[RebelOne]

50. Fortunately, no.

I have been in a Chapter 13 bankruptcy for the past 3 years and am not allowed to have any credit cards or credit for the next 2 years. That's a good thing because credit cards are what got me in trouble. So, if I cannot pay cash for something, I cannot afford to buy it.

[alfredo]

51. I had my limit dropped to $5,000.

[quiller4]

52. In a mixed way. A department store card I no longer use

notified me that my interest rate was increasing and that my minimum payment would double. Penalties for late payments would nearly triple. I have a zero balance on the card and haven't used it in years. I opened the card in the early 1970s. GE Money services the card for the department store chain.

Our only VISA if from BOA. Our limit was increased twice last fall and our interest rate dropped in October and again in January. Although we carry a fairly high balance, we usually make two payments each month paying about 3 times the minimum payment. BOA keeps sending us special offers in the mail trying to get us to take cash advances we neither want nor need.

We bank with KEY which recently reduced the interest rate on our line of credit which we have not tapped and plan not to.

We pay off our Amex bill in full every month but we are being deluged with offers to extend payments.

[prolesunited]

55. Me too

At the same time they are making terms so much more unpalatable, I've gotten more checks to access my credit than ever.

No one has reduced the amount of credit available to us, though. If we did get close to our limits, we would be so screwed. I'll lose the house before I do that to myself.

[Texasgal]

54. I cut up all my credit cards two years ago.

I just decided that I was not going to be a slave to credit.

I only pay cash now and I have a small account that holds emergency funds.

Credit card companies are the devil!