My APR just got increased by 270 percent

Open a new card at a good local credit union and cancel the old one, locking its interest rate and balance. Hopefully the new card has a decent credit limit so your FICO score is not hurt.

 

The majority of the population does not use credit responsibly. If someone's making the minimum payment on a large balance, the company isn't going to recoup what it's lost unless the interest rate is very high. There's not a high enough reward for the risk of loaning someone several thousand dollars if all you stand to make in interest is a few hundred.

And then at the other end of the spectrum, it's like other people have said: There's no money for these companies to make from people who pay their balance off every month, particularly not if there's a reward program on offer.

 

Someone was right.

I do not recall receiving a notice that said I would have my rate increased by 270 percent in the January statement. LOL

How can anyone get arrested for loan sharking... ever... if this sort of practice is allowed?

 

"The best-laid plans..."

 

I'm that kind of customer the credit card companies hate: Guy who uses the card with the intention to pay off the balance next month. The only times I've used a card otherwise are for car repair and when I needed to replace both my stove and refrigerator after they broke down within a week of each other.

One of the companies tried to charge me an annual fee two years ago because I had a $0 balance on it on December 1. I called and said, "Cancel the card. I have others and this won't happen with them."

Once they realized they needed me much worse than I needed them, the annual fee magically dispappeared.

Basically, if you do have a card, chances are there will always be a company out there that will give you what you want. If your company shows you they don't need you, then you really don't need them.

 

Problem was, the credit card companies were hitting the good payers with higher interest rates anyways.

I had a card with a 7 percent interest rate, paying more than the minimum balance each month. One month, I opened my bill to find out that they had doubled my rate to 14 percent. I promptly got on the phone with them, pointed out that I had paid on time each month towards the balance, and demanded that they cut the rate. They agreed to cut it to 9 percent, then snuck an extra 1 percent a couple of months later.

Still, not only did I pay on time, but I would have been the type of customer that they would have wanted to keep happy. I had a balance of several thousand dollars due to some emergencies a couple of years earlier, and they would have made money off me.

But I came into a little bit of money recently, and when I received the letter from the company saying they were going to boost me to 26 percent, I wrote them back a nasty note telling them I was opting out.

They lost a customer that been making money off of for 14 years because they tried this bullshit. If Congress showed any guts, they'd hammer them some more.

 

I envy people like Big Ragu, who apparently don't have to live in the real world, and rather just on a spreadsheet in a Wall Street think tank.

 

Here's a problem that I'm still debating with. If I cut my card up not use it, should I keep the account open or close it completely? If I close it, then I'll get zinged on my credit score report. Many have advised not to "close" the account.

What is the best route to take?

 

Bingo. Ragu, this is the point you're missing.

The credit card companies mismanaged their risk, doling out cards to anyone with a pulse, then got themselves burned and saddled with all kinds of defaulting customers when the economy went south.

So what did they do? They took it out on their good customers. The ones like the Baron and myself, who paid their bills on time, paid more than the minimum and ran balances that gave them a stead income stream.

I have Capital One and AMEX cards, paying 9.9% on the former and 15.9% on the latter. In one two-week span, Cap One jacked my rate up to 17.9% and AMEX to 20.9% (while cutting my credit limit from 20.5k to 13.7k), telling me in letters they were doing this "because of the current economic climate."

In otherwords, because they could.

When I called Cap One, they told me point blank they couldn't lower my interest rate back. When I threw my 725 FICO score and pristine payment history in their face, the drone on the other end of the phone simply read from the script and said they were doing this "because of other customers."

Ragu, if these companies weren't the abject greedheads they were, perhaps they wouldn't get regulated. But like many big businesses, they can't see past the next quarter earnings. So their short-sightedness gets the better of them.

And regulation from this kind of abuse is not only in everyone's best interest, it's a necessity.

 

I paid off all my credit cards a year ago and I'm glad I did.

I use one for gas and pay it off in full every month. My credit is cleaner than a hound's tooth, but that didn't help me get a refi approved this summer with the same company that holds my mortgage, so fuck 'em all. I take that extra $200 I save on credit card payments every month and put it down as principal. By doing that over the long haul I hope to screw my lender out of $50K in interest.

 

The damage you do to your credit by closing the account is, by far, outweighed by what you can do to your overall financial -- and even emotional -- health.

Cut it up and close that fucker.