Outrage continues over skyrocketing credit card rates

[Joanne98]

Syracuse, New York (WSYR-TV) - The outrage is growing from credit card customers and lawmakers who say companies that are unexpectedly raising interest rates on customers with good credit, just aren't playing fair.

Capital One is the latest to mail "rate notification change" flyers to some customers. Card holders, who pay on time and always more than minimum, are in some cases seeing their rates doubled.

We pushed lawmakers for answers as to how they're letting credit card companies get away with this.

“What Capital One has done is outrageous and should be prohibited,” says Senator Chuck Schumer.

Credit card companies can basically change your rates at any time. They're strapped for cash, so apparently, now's a good time.

“These companies have no leg to stand on -- they're hurting because of mistakes they made and now they want consumers to pay,” says Schumer.

New rules will prevent card companies from taking advantage of customers like this, but they don't go into effect until July of 2010. Why? In light of the credit crunch, the federal government gave them a little extra time to prepare -- time that's now turned into a loophole.

"We need to make sure there is a level playing field, that people understand what they're getting, they know the interest rates involved and credit card companies play fair," Congressman Dan Maffei says.

Schumer says legislation he's drafted would prohibit card companies for raising rates on existing debt. It would also require them to eliminate most of the fine print, and be more concise and upfront with the terms and conditions of your agreement.

“We expect it to move in the next three to four weeks in the Senate and the House,” Schumer says.

Schumer says if he can get the bill passed, it would go into effect within three months.

If your rate, though, has already been increased by your card company, it won’t come back down again, as the legislation wouldn't work retroactively.

But at least in the future you'd know that when you sign up for a card, this oversight would be in place.

Maffei tells us the Financial Services Committee he sits on is working on similar legislation that includes stricter rules for credit card companies.

http://www.9wsyr.com/mostpopular/story/Outrage-continues-over-skyrocketing-credit-card/Frzio2eNaUGKR9f2I6K-9w.cspx

[AndyA]

1. How to get even with Capital One

Tell everyone to avoid putting a Capital One card in their wallet. Word of mouth has more impact than advertising does.

If you have an account with them, pay it off as soon as possible. Do not close it as it can have a negative impact on your credit score if you do. The exception would be if you carry a high balance and must avoid the higher interest rates. In that case, it might be best to take the credit hit and close the account, in order to keep the lower rate in place until it's paid off. When closing your account, scummy Capital One will lower your limit to the amount of your balance, which makes it look worse for you.

If you don't have a big balance, and want to keep the account active so it won't impact your credit, use it once every 3 months or so for a small purchase that you can pay off before interest fees can be added to it. If you have an account that charges an annual fee, you have to decide whether it's best to keep that account open or close it. There are lots of accounts with no annual fees, which to me are a huge waste of money.

Move any savings or CDs to another institution (hopefully one with better rates) as soon as possible without exposing yourself to any penalties for early withdrawal.

Remove yourself from any and all advertising lists. Send in those opt out notices if you get them by mail; that way they can't make money by selling your info to another list.

Capital One will see their income plummet because of this, and they will quickly learn that pissing off all of your customers at the same time is not a good policy.

I'll bet they're hoping that most will just take the increase and continue to use their cards. We need to show them that won't be the case. What Capital One is doing is abusive.

[ixion]

2. If they really wanted to fix this, they'd set the APR at a fixed high of 15%

and be done with it.

As long as credit card companies can charge 20%+, it is nothing more than legalized loan sharking, IMO.

[Rashel]

3. They are only hastening their own demise.

Desperate people will continue to use these cards and will have a higher probability of not being able to pay them back.

[notesdev]

4. Moral of the story

Be careful of what you ask for; you just might get it. This covers both the card holders, who ask for money they don't have, as well as the card companies, who bribed to passage that draconian law in 2005 which has since come back to bite them in the balls.

[ConcernedCanuk]

5. Cut up my credit cards over 20 years ago - problem solved

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TRY IT!!

oh - quit smoking a few months back

THAT HELPS TOO!


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