That one late payment could cost you a bundle »
Posted by: engineer 3 months, 3 weeks ago86 CommentsReflectReport this Story
They are raising cardholders' interest rates because of one late or missed payment, or a payment of less than the minimum. Some companies are even raising rates for cardholders with perfect payment histories if they make a large purchase on another card, or just get another card.
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Comments So Far: 86
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engineer
April 1, 2008, 8:13 a.m."I was late on my Chase card by one day, and my interest rate jumped from 7.99 percent to 29.94 percent," Tarek Salib of East Rutherford said Friday. The new interest was applied retroactively to the whole balance of his card, which was near the limit at the time, he said.
That made Salib's minimum payment shoot up to $700, from around $300. Salib contacted the credit card company, but was unable, after many calls over two weeks, to get the interest rate lowered.
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RichFatCat
April 1, 2008, 5:40 p.m.Suggestion for Salib: Don't be late! Do something radical, like pay a day early.
Tough turbans when you have to live up to your contract agreement.
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madmaxine
April 1, 2008, 7:20 p.m.We have had our fill of credit card debt we used to owe over 10,000 dollars. Now one of our cards has been paid off and shreaded, the other is less then a year away from being paid off. The of the money that used to go the law abiding version of the mafia will go into an account to save up for a house.
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Francisca
April 1, 2008, 9:31 a.m.Thanks Engineer for this article! "Menendez recently submitted a bill to Congress that would protect consumers-especially young people....." Are young people the only one concerned? It seems nowadays nobody is spared! Never buy if you can't offer it!
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not2needy
April 1, 2008, 9:36 a.m.We have a society of vultures, preying on the poor who are trying to keep life and limb together. If you can't make the 7.99% payment, what makes these people think you can pay the 29.94% interest. The same probably happens when their annual fees, etc causes the card to go over the limit, any excuse to bilk the public. It infuriates me.
Young people are a concern, but what about the working poor, elderly, and everyone else this affects?
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texangelwings
April 1, 2008, 9:39 a.m.It is going to get bad! Credit card companies are just liable to increase the rates so high, that only the very rich will be able to afford to use their cards! I am so glad that all my credit cards are paid in full and if I charge anything, I pay the bill in full as soon as it arrives.
Good article, thanks engineer!
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Nowalive
April 1, 2008, 10:12 a.m.More and more I am using cash to make purchases. With cash you can also haggle a bit on the price of goods and services. I hate being in a line behind someone that has to go through 10 different cards to find one not declined.
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joeblowe
April 1, 2008, 11:45 a.m.Credit card companies that pull this crap (and almost all the big ones do) are EVIL! I'm talking 666 evil here. There is NO reasonable excuse for doing this. The crap they hand out about "increased risk" is simply that: crap. By raising the interest rate they actually make it MORE likely that the person they have just screwed will default, not less. I suspect that aside from pure greed, there is an accounting motive here. If someone DOES default, ther is a big chunk of money applied to INTEREST PAYMENTS (on the books, anyway) leaving a large principle they can write off for a tax benefit - even though the dollar amount of the original debt may have already been repaid. Again: EVIL! I'd ALMOST recommend stopping payment to banks that screw you this way, but that hurts YOU as well. Limit your exposure to this sort of crap and if a bank advises you they intend to thusly screw you, tell them you REFUSE the account changes. Close the account. Take the business elsewhere.
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lkrdgeva
April 1, 2008, 12:44 p.m.I never could understand why these credit card companies raise their interest rates so much when someone is late making payments. If a person is having difficulty making payments, the credit card companies now make it even more difficult for them to make payments? What kind of logic is that?...unless they want the card holders to get so far behind that collection agencies must then be used to harrass them for payments they can't make. Makes no sense to me.
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AnteUp
April 1, 2008, 3:21 p.m.ikrdgeva ~
Economics is not my strong point, so it came as a surprise
to me that those clients who pay off their credit card debt every month are not the ideal customer. They want clients
who purchase regularly and make the monthly minimums.
That is to increase the debt and make it last longer.
That's their bread and butter - and you are the only
one sighing with relief when you pay the balance off!
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ML2007
April 1, 2008, 4:32 p.m.It is called usury. It use to be against the law. The definition of usury is the lending of money at exorbitant interest rates. The advertising the credit card company uses is called a bait and switch method. It too, use to be illegal. They offer you what appears to be a great interest rate and then switch it on a whim. They recently did that to me. I was lucky enough to have the money to pay the bill off in full, which surprised them. I canceled the card. The goal of the credit industry is to enslave the general public to their exorbitant interest rates. The credit industry is big business, and they have been lobbying our politicians for years that have passed the current laws favoring the credit industry. Joeblowe is right, their intent is pure evil. Even the Bible says to "owe no man". So, why are they encouraging us to be in debt? Why is our President who professes to be Christian? Why are our politicians? Easy answer- money, greed, and power.
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dsmall
April 1, 2008, 5:46 p.m.Rule 1. If you want to get poor and stay poor, use credit cards. It's as simple as that.
Rule 2. As soon as you quit paying credit card "tax", you can start saving money. That is how it works.
Try reading Dave Ramsey. He's helped thousands of people get out of appalling credit card debt. www.daveramsey.com
Two sentences in his book were worth the entire purchase price; Dave knew more than my divorce attorney. Read him if you'd like to get out of debt and have some plan of retiring in dignity.
-- thanks,
dms
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engineer
April 1, 2008, 6:54 p.m.I know some professors who lost their jobs due to downsizing. Not enough money to educate our children in what should be good jobs. They may lose their home. Not because they couldn't read or understand, but because the kind of jobs they taught were shipped overseas by corporate greed.
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walden3
April 1, 2008, 7:55 p.m.""It is highly unusual for us, and not our practice, to reset someone's rate so drastically because they are one day late," Tanya Madison"
Liar, liar pants on fire. It's exactly what they do. It's written into the software there is no human oversight as Ms. Lying Bloodsucking Leech Madison would have us believe. If you're payment gets keyed in a day late then the rate jumps automatically.
What a liar.
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walden3
April 1, 2008, 8:03 p.m.There's another thing that these thieving no-honor credit card companies are doing. It's called universal default. Check your agreements for it.
Under the universal default clause of the agreement if you miss a payment to another creditor the credit card company can declare you in default and hit you with rate hikes and fees and maybe even demand full payment of the outstanding balance. So if you pay your electric or cable bill late, under universal default your credit card company can declare you in default even if you've been making payments on time.
It's not just the rates hitting people. These companies have whole rooms filled with cauliflower brained lab rats who conspire to come up with new fees to hit customers with. Need a copy of an old statement, be prepared to pay. Need proof that you made a purchase, be prepared to pay. Go over your credit limit, be prepared to pay.
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sideways
April 1, 2008, 10:29 p.m.Wow!
The rich (companies) keep getting richer...
Probably why we dont carry a balance. Still not right when they change the terms under which we agreed to begin with.
peace~
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wide-eye
April 1, 2008, 11:22 p.m.The credit card companies could never have gotten away with this if not for the almost total lack of financial education in the schools. Basically, all finanical institutions operate on just one principle: GREED. They will find ways to trap and bleed the unwary regardless of laws against usurious dealings. When one method becomes illegal, they will invent another. The people who signed adjustable rate mortgages were ignorant, trusting and naive, which is why they were victimized. It is high time that Americans take control of their financial affairs, from household to county to state and to federal levels. If voters had been educated, the national debt, which Bush has run up so high, would never have been tolerated.
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wide-eye
April 1, 2008, 11:30 p.m.The moral of the story of your card's compounding debt
Is don't buy what you can't afford but think you can accept
The banks and lenders only want to gobble up your wallet
They don't care if you have to sleep upon a warehouse
pallet.
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