I don’t remember being notified by my credit card company (let’s call them American Duress) but I just noticed that my minimum due for May is about $150 more than it has been. I called and spoke to a nice woman (worker drone) who said this was the first case she had encountered like this but apparently it is happening to all credit cards soon. What she told me was basically “since you have paid more than the minimum due on your last 6 payments, we are allowed by law to raise the minimum”. Huh? So I said I guess then that I am being punished for being a good consumer and paying on time and more than the minimum due. She put me through to the credit hardship dept. and the man (takes a man to do that job) told me there was nothing he could do to lower my payment.
OK. Who can explain this to me in the simplest terms?
The credit card companies are evil but I have NEVER heard of something this moronic. What they are doing to you is horrible. Does it mention they have the right to do this in your cardholder agreement?
I once made a payment one day late for a card I have had for 10 years and because of that one late payment they jacked up my interest rate from 9% to 19% and they refused to change it back.
Was this a new credit card?
Did your rate just go up?
Is your balance higher then normal (you said your minimum payment is up by $150, but you didn’t say what it’s up from. Up from $50 is a big deal, up from $900, not so much)
The reason I ask if it’s new is that I’m wondering if you were in an introductory period with a smaller interest rate (or none at all). If that’s the case, when you jump back to a normal rate (say from an intro rate of 5% to a normal rate of 12.99%) it’s going to raise your minimum payment as well.
There was quite a bit of news when the Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit CARD Act of 2009 was enacted in 2009. The law would not take effect until February 2010, to give credit card companies ample time to notify all of their customers of the changes. I received numerous letters from all of my credit card companies (including American Duress) explaining changes to be made under their respective TOS’ as a result of the law.
You may want to read up on the law, read up on your credit card’s revised TOS, and then look at your own issue to see if your credit card company is meeting their obligations under the law.
I have a B of A card with a 14% rate, which I have never been late on. Last week, I got a letter stating that if I ever had a late payment, the rate on new purchases would go to 29% [SIZE=2][COLOR=black]. Bank of America.[/COLOR][/SIZE]
It’s not a new card, had it since 1995. Never a late payment in all that time. Minimum due went from around $200 to $350 and they say it will stay that way indefinitely. Worker drone woman suggested I try paying just the minimum due to see if that would affect anything. Not my style but may be the only way to handle a ridiculous situation.
One of the provisions in the CARD act was an increase in the legal minimum payment. Some cards had minimums so low you would never pay of the balance and a single small purchase would cost thousands in interest once finally paid off years later.
But AFAIK, that change went into effect a year ago and has nothing to do with any cardholder’s particualr balance or payoff situation.
Note that the change raised the formula for the minimum payment which would still be legal. I doubt it precluded the card issuer from coming up with an even higher minimum payment according to rules of their own.
I think you need some more digging with your issuer. It sounds like the customer service folks didn’t really have the story straght.
I would call back today, on a weekday, and talk to someone else. Amex has really, really good customer service and someone should be able to get this straightened out or at least explain to you what happened.
If it is AMEX then the real underlying reason is that AMEX wants to shrink its credit card segment, and so they’re pushing people who meet certain credit criteria and hold balances to the door. Financial Times had a profile on this some time back if my memory serves.
No… bad consumer! Imagine denying the credit card company the opportunity to make as much interest as it possibly can. Credit card companies especially dislike those nervy cardholders who actually pay their balance every month, thereby evading loan-shark interest rates completely. Imagine the frustration of being allowed to charge 29.8%PA and having some customers actually pay 0%; especially in a world where term deposits rarely pay 2% or 3%.
Assuming you have the card where all purchases paid off that month are interest free- maybe they are trying to make you underpay (or late pay) so as to charge you the late fee, and also pay more interest.
If you have an outstanding balance, is you payment applied to the most recent (interest free) purchases first, or your outstanding balance, thereby converting all your recent purchases into interest-accumulating charges since the day they were made; whereas, what you pay off that mnth is usually interest free.
Their strategy is not to keep customers paying off, as much as to make them struggle to make the minimum balance and so pay a lot of interest.
That’s my guess. The OP already said she was paying more then the minimum so I assume this isn’t going to be a huge struggle for her. Also, I foresee Amex lowering her credit limit every few months as her debt goes down.
A few years back, Amex offered to ‘settle’ with a lot of their current credit card holders. I think the deal was that if they could pay off what they owed in 6 months and closed their card, Amex would cut their debt in half. IIRC, they also wouldn’t ding the person’s credit report. They were just trying to lower their own risk.
Amex really isn’t like the others credit cards. They typically have a lower interest rate, they don’t look for ways to hide fees. They’re customer service is great. It really is a good card to have.
Many years ago (1985) I took a ski trip excursion. The bus company said “Visa, Mastercard, but not American Express.” At the time AMEX did not offer a balance-carry card, you had to pay in full every month. The bus driver said that AMEX was the only card company that took their time paying, sometimes up to 3 months or more. It was not worth the hassle since most people had VIsa or MC, so they just stopped accepting it.
That was a long time ago. They pay merchants just like every other credit card now. If I, a business, swipe an Amex card, the money is in our bank account within 24-48 hours. They do charge us a higher rate for accepting it, but to not accept it would mean turning away an incredible amount of business since so many sales people only carry an (employer issued) Amex card.
It’s still not accepted everywhere and I wouldn’t advocate having only an amex card, but it’s still a good card to have. Their (car) rental insurance is really good and easy to deal with as well.
However, she was carrying a balance on what appears to be a regular basis if I read this right. Given their new policy, I can see this falling into a category of customers that they’ve decided really should be with Visa or Mastercard.
This. The minimum payment on one of my credit cards went down on my credit card. Suddenly, one month it was ~70 less then the month before. I hadn’t made any big payments to lower the balance to justify it. There was nothing squirley in the bill so didn’t thing anything of it and paid the amount I would’ve paid without the decrease.
That is entirely false. Credit card companies love cardholders who pay off entirely. I am one of them. I have been continuously upgraded with more rewards, benefits, etc during my entire banking relationship with the company. I have carried a balance perhaps once every five years.
In fact, customers like myself are brilliant, as the CC does not need to carry financing to cover me, does not need worry about write-offs and makes a tidy profit on me from fees. It’s brilliant and low cost for them.
People whinging on about credit cards is typical, but as typical their primitive understanding of their finances.
As for loan shark rates… 23% annual is not loan shark rate, positive gift really. Loan sharks practice that as a daily rate.
I’ve got to second wmfellows: I have one credit card (a MasterCard with Chase) and pay it in full on time every month. Judging from the volume of credit card offers I get in the mail* it clearly doesn’t make me unattractive to credit card issuers. Apparently, paying your balance every month is catnip, not kryptonite.
*Or used to. In a recent thread on this board, someone mentioned a website where one could end mail offers from banks, etc., one already deals with (not the general FTC-mandated junk mail opt-out) and I took advantage of it. No credit card offers since.