Kevin's Watch

Ive had a Capital One card for years. Ive always had a good interest rate 7.9% fixed and I dont carry anywhere near the max. Ive never been late and my credit is outstanding.

I got this letter in the mail along with everyone else that has a capital one card.

"In light of rising interest rates over the past few years and the rate currently applied to your account balance, the APR's on your account are about to increase" Your new rate for purchases and balances will be as follows: A variable rate that equals the Prime plus 7.65% currently 15.9%

So I called them and worked my up through about 6 levels of managment and they all had deaf ears. So even though they currently enjoy getting 7.9% out of me and know that I will be moving my balance and cancelling my account with them, they will do nothing to stop my rate from increasing.

Greedy bastages.. Im done with them... Im truly now thinking I might get off the grid as far as credit is concerned. I can be debt free as far as Credit cards in a matter of 6 months or less so I think I will just get rid of them and go cash (or debit card) only. I will just put two paychecks into savings for emergencies that would normally require credit cards.

Can you tell Im a bit disillusioned by the whole credit card scheme. If there was ever an industry that needs regulation its this one. After Capital One went up on my rate I browsed the web and found tons of crap that these companies are doing to try to throw people into debt they cant pay or to take unfair advantage of consumers. The newest thing they are doing is looking at your credit report regularly. This tactic is called 'Universal default' and it means that if you are late on anything... anything at all (even if its not a credit card), then they use that as an excuse to go up on your rate as a higher credit risk. That's akin to a mortgage holder raising your rate because you paid your phone bill late.

Then there are the penalty rates of up to 32.24% for a variety of infractions, most commonly late payments. These rates apply to your entire balance, not just new charges. They are also now setting a time not just a date. That time used to be midnight on the day its due. So if your bill is due by the 14th... it might be due by the 14th by 1PM.. So you could pay it on the 14th and still be late. They are also tending more and more to decrease the grace period before you have interest accrued. It used to be 30 days. Most are now 25 and some have moved to 21.

Nope think Im done with the whole stinking industry. I feel bad for those that cant do that and are stuck with years of paying for cards they wont ever be able to pay off.

I just got the same letter from Cap One. I'm pissed. I've been a customer of theirs for about 10 years, never had a late payment, and haven't carried a balance for more than a month or two until the last year (thank you divorce and greedy ex).

I am seriously considering taking the proceeds from my house and paying off all my debt rather than immediately reinvesting in another home.

Good idea about paying off the debt. Very good idea, unless your mortgage interest deduction has been providing you with a significant tax advantage.

As far as having a credit card for emergencies - it's still a good idea. I suggest that you look at your nearest credit union - many of which only require that you live in a certain county to join. Most of these will offer you a fixed rate Visa or Mastercard - the rate won't be a ridiculous teaser rate like 2.9% (the one I see most often is 9.9% or 12.9%) but neither will it jump to 21.9% just because they want to make more money off of you. My credit union even links my Visa card to my checking account, so in the unlikely event that a check overdraws me, it autocovers the balance with an appropriate charge to my credit card. Do you know what the fee is for this service? $0, as long as I pay the card off within the grace period. Oh, and the credit card has no annual fee, either.

So check out your local credit union.

I will regret saying this, but I have never been mistreated by any credit union, and I have belonged to three in my life (one of which I still belong to, for about 15 years). They aren't out to make a profit, they don't have shareholders to impress with ever-increasing returns, and they typically don't engage in screw-you-all policy changes.

dw

Yeah, I'll never go back to a bank. Three credit unions and never a serious problem. Compare that to bloodsuckers like BoA, who once processed a check at midnight and a deposit at 1 minute after, hitting me with a $15 overdraft fee (a lot of money when you're an E-1).

To be honest, if I'm carrying a balance on my credit card, I just apply for a card which I can balance transfer to at 0% for a set period, and make sure it's paid off before the 0% rate runs out (typically 6 months to a year). Then close the card down.

I don't feel any loyalty to these bloodsuckers - they are only out to make a profit, and that profit comes out of your pocket.

SB, glad that you're done with credit cards. I'm through with them too. Methinks the credit card companies are the true "soul biters."

*shrug* I don't have a credit card. Never have. If I don't have the cash, I do without. Too tempting...especially on the internet and with my book addiction.

Speaking of regulation though, SA has just passed a new Credit Act. Effectively, it's illegal for companies to grant you credit if you are unable to pay it off, and the onus is now on the company.

As long as you make full disclosure on application, the creditor can be liable for your default if they grant you unrealistic credit. (Can't repossess in other words.)

On the one hand, it makes it a lot harder for people to get credit, especially for things like houses. On the other it may prevent the ever-growing debt trap.

Of course, it's also sorta like the government trying to protect people from their own mistakes, which I'm less in favour of...but I do think that there is a minimum level of education/whatever without which perhaps people need to be protected to some extent. Especially here.

--A

That sounds like a good system. I mean, as far as I can tell there are few places where you can actually get good information about what makes the various credit companies worth applying to, without being lied to or exaggerated to to make a sale.

I've never had a credit card (shocking for a teenager theses days, I know) but that's mostly because it defies logic for me. Why spend money I don't have? Especially because for all the major things that I need money I don't have, I wont be putting it on a credit card, like a house or a car for instance.

I dunno, it's just never made much sense.

The problem is that with no credit history, you are less likely to be approved for the big things like cars and houses. So, even if you don't use it very much, it's a good idea to get a credit card, charge things to it that you would normally buy anyway, and always pay the balance off each month.
That way, you don't get stuck with interest charges that you don't need, but you still get the benefit of building a good credit history.

dw

Good point, but (here at least) you don't have to use a credit card...any credit account (like with clothing stores) will do. Problem with credit cards is (here at least) they cost you just to have. Even if you don't use it, you pay for it. Or if you use it for "essentials" as you suggest, you still pay more because of the card charge.

I got an account at a big clothing store chain, bought something, paid it off within 2 monhs, bingo--favourable credit history. (They checked it when I rented my current place, so was lucky I did.) (Build up that record I mean.)

--A

Despite interest rates for loans going down in Australia (dramatically) a couple of years ago, my credit card interest rate has just continued to rise (and it's the same with the majority of Australian banks). I think I'm up to about 17.25% (a couple of years it was only 7.25%)

...I don't know much about how it all works. All I know is that I owe the bank a fair amount of money!

I have no problem with Credit Card companies. It's all about managing money effectively. Sorry if that offends, but that's how it is. The banks loan money we wouldn't have otherwise, so they have the right to make money off it.

Loremaster wrote:I have no problem with Credit Card companies. It's all about managing money effectively. Sorry if that offends, but that's how it is. The banks loan money we wouldn't have otherwise, so they have the right to make money off it.

Me-thinks you wouldnt think that way if you had a couple thousand (or more) on a CC and then for no reason except (changing economic conditions) your card went from single digit interest to double. Effectively doubling or tripling the amount that you pay in interest as opposed to principle. Im lucky because I can afford to pay mine off and just give them the thumb. There are tons of people who cant.

While I agree that banks have the right to make money. They dont have the right to abuse their customers and changing your rate from 7.9 fixed to 15.9 variable is nothing but abuse. Changing your CC rate because you were late on your light bill once is abuse. Without regulation CC companies are being allowed to get away with treatment that was considered illegal not so long ago.

SoulBiter wrote:Me-thinks you wouldnt think that way if you had a couple thousand (or more) on a CC and then for no reason except (changing economic conditions) your card went from single digit interest to double. Effectively doubling or tripling the amount that you pay in interest as opposed to principle. Im lucky because I can afford to pay mine off and just give them the thumb. There are tons of people who cant.

Okay, you are going to hate me for this - as will a few people - but I'm not going to 'pull punches'. I don't let myself get into a position with thousands oweing on a card. I save almost every cent to keep a 'float' that I can draw upon in emergencies. But I rarely purchase something until I well-exceed that float. And if the card is used, it's payed back immediately. Admittedly, I don't have emergencies, but at least I have my own money to pay for that rather than the bank's money.

As for major interest changes - well, I admit that's wrong. I'm fortunate my bank doesn't do that.

Then you have never experienced predatory lending. In the US, credit card companies are competing for attention, so they come up with 'no annual fee cash back teaser rate' cards to get our business, then they systematically fee-fee us to death and bludgeon us with the fine print.
It is possible to avoid these predatory creditors, but their advertising is seductive and pervasive, it touches us in our materialistic little dark places, and it starts in college - you can't walk near a college campus without getting a dozen credit card offers. They pretty much give them to you, whether you have a job or not. They want to indoctrinate you early on in the cycle of revolving debt.

Speaking as one who financed his last year of undergrad living expenses on a credit card, I know how difficult it is to crawl out of that.

The additional layer of fun is that more and more are charging up their credit cards then filing bankruptcy. This means that the creditors aren't getting their money back, so to retain their margin growth, they raise the rates for those who do manage to at least make their minimum payments each month, to cover those that go into default.

It's ridiculous, but the current state has developed over many years.

Yes, it is about managing money effectively, but not all of us are born or raised with that particular skill.

dw

Loremaster wrote:I have no problem with Credit Card companies. It's all about managing money effectively. Sorry if that offends, but that's how it is. The banks loan money we wouldn't have otherwise, so they have the right to make money off it.

What...you mean I'm not managing my money effectively?! Some of us have trouble making ends meet and having enough money to put food on the table...and sometimes have to borrow for things like (for example) getting a car so we could get to a flamin' job so we could make money!

I *am* offended. You're making a generalization! And I think you should keep in mind your own personal circumstances which, you'd have to say, are quite fortunate!

Seareach wrote:

Loremaster wrote:I have no problem with Credit Card companies. It's all about managing money effectively. Sorry if that offends, but that's how it is. The banks loan money we wouldn't have otherwise, so they have the right to make money off it.

What...you mean I'm not managing my money effectively?! Some of us have trouble making ends meet and having enough money to put food on the table...and sometimes have to borrow for things like (for example) getting a car so we could get to a flamin' job so we could make money!

I *am* offended. You're making a generalization! And I think you should keep in mind your own personal circumstances which, you'd have to say, are quite fortunate!

At the risk of further offense, I will say - 'no comment'. I disagree with what you are saying. I have no wish to further your anger, so I will respectfully not push this with you.

LOL! Yeah, ok Lore. That's fine by me.

DukkhaWaynhim wrote:They pretty much give them to you, whether you have a job or not. They want to indoctrinate you early on in the cycle of revolving debt.

I admit they exist, but whose fault is that? No offense meant, but they are merely taking advantage of a difficult situation. No one is forcing you to take one of their loans.

DukkhaWaynhim wrote:Yes, it is about managing money effectively, but not all of us are born or raised with that particular skill.

dw

True, but that's not the banks' fault. I agree that the banks are opportunistic - but that's an opportunity created by the people - or human nature.

Opportunistic, greedy, works out to the same thing. Not to mention honesty in advertising. It was that "giving cards to the practically unemployed type of lending that the new Credit Act here is supposed to prevent.

--A