Credit card interest rate raised on closed account..

The last time they tried this, I had a 4.99% permanent interest rate on the card. I opted out so the rate would not adjust to 19.99% (the money was used to buy some dividend-paying stocks yielding 12%, but I digress) and thus the card was closed.

Now I have received another notice from them intending to raise the rate to 24.99%, on the closed account. I thought that when I closed the account, the terms in effect at the time of closure would remain in force, which kept the previous rate at 4.99%.

So I called BofA to confirm, and was advised that yes, I would have to opt out of the adjustment. Exactly how does this work?

For what it’s worth, the [del]inbred moron who was higher than a supervisor[/del] account manager told me the chance to opt out was a “courtesy” BofA extended to its customers. She also told me that the card agreement says they can raise the rate at any time, for any reason. Some courtesy, eh?

Did I just get lied to?

ETA: I have never been late on this account, or any other, nor have I gone over the limit or defaulted in any manner which would allow them to automatically switch the current “purchase rate” to the “default rate.”

I don’t understand. Have you paid off the card? If not, then how is it closed? And if so, then what do you care what the interest rate is?

I second Rucksinator’s questions. The rate on one of my cards was just raised recently (like you, for no real reason or fault of my own), and the disclosure statement gave me the option of closing the account, at which point I had to immediately pay any balance in order for the account to close. If you’re still carrying a balance, it’s not closed.

Yes, it’s closed. I cannot make any further purchases and it’s listed on my credit report as closed. Certainly I did not have to pay the entire balance off. When I closed the account, it was closed at the terms that were in force the day I opted out of the originally-proposed amendments to the cardmember agreement (which proposed increasing the interest rate).

If you have a balance in/on it, it isn’t closed. They may have set it so you can’t charge more to that account, but it won’t be closed until you pay it off.

dbuzman is correct. A credit card account is not closed until it is both closed to further use and paid to zero. When you tell the credit card company “close my account,” you’re telling them “I wish for you to discontinue my ability to use the account for further purchases, and set it to be closed when the balance reaches zero.”

You cannot close the account – the issuer can close the account, when the account is paid off. You can request that the account be closed, and the issuer will agree to do so, if the account is paid off.

It is not closed if it’s carrying a balance. It’s in a state of “close pending,” meaning that (generally, my experience is limited to two banks) it will close out entirely after it is paid to zero and cycles for one full period.

As you owe them a balance on the account, it’s still considered to be an open line of credit (though may reflect “closed” on your credit report because it’s no longer available for you to use), and likely the card terms do allow the issuer to change the interest rate at any time, for any reason, unless you opt out of a change in terms. Usually opting out of a change will mean that the issuer (not you) will be the one doing the closing, and your balance will be due immediately.

ETA: Hmm. I just read that your account was closed because you opted out of a prior change in terms, so the original terms should still be in effect. I’ve never seen a case where a change in terms was issued a second time on an account already pending closure, but I believe that since the account is still open (believe it or not), you are either bound by the terms or can (once again) opt out. This time, though, they may want you to pay it off immediately if you opt out.

I’ve seen the wording used by IAmNotSpartacus and the option was as stated. The remaining balance was to be paid off under the old terms and rate with no ability to charge any longer. Any wrongness in the terminology was the fault of the bank.

Isn’t this dealt with in the new bill that just passed? I understand that it isn’t in effect yet, but the idea is that if the CC company raises you rate, then that raise only applies to new purchases, not to the existing balance.

This is exactly what I am talking about.

So when the bank tells me the account is closed, they are not being forthright and the account is not actually closed? Contrary to what it says on the monthly statement: “THIS ACCOUNT IS CLOSED.”

For the time being it appears my rate will continue at 4.99%. We will see what the confirmation letter they are sending me says, but I did take some notes from the phone call where the rep said there would be no rate increase since I had opted out and that I could continue paying down the balance as agreed.

Yeah. I have a Bank of America card, and recently got a “your rate is going up” notice, and the bit that talked about opting out said that if I used the card again after such-and-such date, that meant I consented to the rate increase.

I’ve got a balance right now (one of those promotional-rate checks came in just as my daughter’s orthodontia needed to start) but I am NOT using the card again. Probably not ever, I’ll most likely really close it as soon as the balance is paid off (in a couple of months).

I’m surprised that the OP’s account shows as “closed” on credit reports. To my mind, that’s very different from “inactive” or whatever seems more appropriate.

I’m assuming you’re still making payments on the account; obviously if you’ve missed any, the bank can probably jack up your rate even if you “opt out”.

I’m curious now as to whether I’ll get a punitive rate increase (as yours seems to be) for daring to opt out of the original increase. If so, I’ll DEFINITELY close the account once it’s paid off. I’m annoyed at them anyway.

There’s been a lot of talk about this lately on The Consumerist.

The revolving charge account is closed. That doesn’t change the fact that you still owe them money. :slight_smile:

Correct. And it seems perfectly reasonable for them to raise the rate to the ‘default’ rate, if a default occurs.