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Did your credit card company raise your interest rate ? Opt Out !

Posted In:  credit cards

interest rateCredit card companies raising rates...

In these tough economic times, the big credit card issuers like Bank of America, HSBC, Chase, Citi, Capital One, and Discover, are all under tremendous pressure to bring in new revenue, and one of the ways they are doing that is to increase interest rates for their existing customers.

If your credit card company chooses to increase your interest rate, they do provide you a period during which you can reject the higher interest rate. If you do choose to opt out, they will probably close the account, but you will be able to repay the remaining balance at the existing interest rate.  You do have to act quickly, as the opt-out period is quite short...

FDIC Consumer Protection law states that banks must give 15 days notice before a change to the credit card agreement can go into effect.  So, be sure to read any "consumer notice" mail or inserts in your bill from your credit card provider. Sometimes they are related to other matters, like a change in privacy policy, but they could be a notice of a rate increase.

Note that they don't have to include this notice or the opt-out period if they are raising your rate due to late payments, but they sometimes still do.

The notice will include complete instructions on how to opt out of the increase, and it's important to read the instructions carefully. Usually, you must opt-out in writing. They won’t provide a form either, so you'll have to write your own letter. Something like the following will suffice.

Credit Card Rate Increase Opt out letter:


To whom it may concern,

I would like to opt out of the interest rate increase outlined in your letter dated 12/1/2007. Please take this letter as my final notification that I do not wish to pay the higher interest rate, and will continue making payments at my existing interest rate.

This letter has been delivered via certified mail with a return receipt. My account information is as follows:

Name: Your Name

Address: Your Address

Account Number: ( don't put your credit card number here, use the account number on the bills )

Thank you for your prompt action.

Sincerely,

Your name


Be sure to use certified mail and a return receipt so that you can prove when the letter was sent.

Other helpful advice:

See our article on new credit card laws.

Status of the Credit Card Act

Our Credit Card Tips section.

 

 

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Comments

Re: Did your credit card company raise your interest rate ? ...

YES they DID!  Etrade Bank Visa raised my rate from 9.9% to 19.9%.  I missed the Opt-Out letter as I was moving out of state at the time.  I had been a balance carrying customer for years and had paid on time at least the minimum and several times paid in full.  Now with the 19.9% on my balance, I'm going to be crushed by the high interest.  I requested they restore my previous rate.  If they do, I'll sing the praises of how reasonable their card is to you all.  If they don't, then I'll share that negative experience!  Has anyone else missed their Opt-Out letter initially and been successful in getting their old rate back?

Re: Did your credit card company raise your interest rate ? ...

AMEX almost doubled my APR.  I didn't have the option of opting out.  They were applying this new APR to my past balances.  They said there was nothing I could do. I might note they never received a late payment from me...nor did any other credit card companies.  Was it legal for them to do this to me given my excellent repayment history?  I will never get this card paid off at this rate.  I am a single mother, a college student...and it's so upsetting to be punished for no reason...

Re: Did your credit card company raise your interest rate ? ...

The irony of all of this is that those pricks just borrowed billions of dollars of taxpayer money, and now we are taking a beating by them raising their rates because they want to pay the loan back that they borrowed from us? I wish I could raise the rate on the loan I didn't have any choice in giving them! The government should have mandated at signing a moratorium on raising rates, and set a limit on interest rates nationwide at 10-12%. All cards at any higher rate would have to be reduced to the maximum allowed if rates were currently over! This would have had the overall benefit of putting millions (dare i say billions) of dollars back in the pockets of American consumer after we were raped at the till on these stupid bank bailouts. See how they treat us after we help them? Does anyone else feel like a chump listening to the BS the government was panning? 
Let god sort em out! 

Re: Did your credit card company raise your interest rate ? ...

Not my card, but my mother's.  My parents are elderly and my mother is legally blind, and they raised her interest rate from 17.99 to 24.99.  They should not be allowed to do that to old people on fixed income.  She called and they told her that is the way it is and there was nothing she could do about it. 

Re: Did your credit card company raise your interest rate ? ...

http://www.ipetitions.com/petition/amexcardmembersprotest/index.html
to sign a petition againest AMEX spread the word

Re: Did your credit card company raise your interest rate ? ...

I am having the same problem with AMEX. I have excellent credit and paid on time always but yet they are reducing my credit line and increasing my interest in October. The new Credit Card Act has royal screw all of us because they have all the time in the world before it starts to raise everyone.

Re: Did your credit card company raise your interest rate ? ...

I received the same notification from AMEX.  I phoned them to tell them I wanted to opt out, although like you say there is nothing in the letter stating you can.  When I phoned them they said everyone was receiving this increase and that you CANNOT OPT OUT!!  Is there even such a thing??  About six months ago they reduced my credit line by 2/3.  I just want out and want to pay off the card at the existing rate.  Anyone have any info on this.  Can AMEX just tell the credit card holder they simply cannot opt out?

 

Re: Did your credit card company raise your interest rate ? ...

How will the new law going in to effect in 2010 effect existing balances on cards.  Will the interest rates we are being charged now be lowered?  Or will they remain what they are, and on all new purcheses be at a lower rate?
 
Just wonering?
Kat

Re: Did your credit card company raise your interest rate ? ...

savingtools's picture

Katia,

If you do opt out of the raise to 29.9%, they would close the account to further purchases, and you would pay the balance at whatever the rate was before the proposed change to 29.9%.  Sounds like that was 24.9%.

What you could try is to call them, and tell them that you plan on transferring the balance to card from a different bank unless they are willing to bring the rate down to something reasonable.  Of course, be polite and don't make it sound like a threat. 

This technique works best, of course, if you really do have another card you could transfer the balance to, as they could call you on your bluff.

Either way, I don't think you want to make further purchases on a card with even 24.9% interest...as you mention, that's highway robbery!

 

Re: Did your credit card company raise your interest rate ? ...

Citi Bank sent me a letter saying they were going to rase my rate to 29.9%, or I could opt out and pay off balance at my current rate.  The bummer of this is that that card has a high credit limit, so by closing it my credit score will drop. If I do close the account, which I am going to becasue 30% is bobbery, but if their over all rate goes down will mine fall as well or am I suck paying the 24.9% that I am going to be closing it at?

Re: Did your credit card company raise your interest rate ? ...

frazzledmom's picture

Hi ashley, nice to meet you. Welcome to savingtools! :)I'd send the opt-out letter. As far as I know that option still stands under the new regulations that came in a couple of months back. Have you contacted them? Call them up. As of February they aren't allowed to raise rates on an existing balance. Now's the time to fight it and the move to a variable rate. Also see this thread on the forum - http://savingtools.com/content/how-protect-your-cc-light-new-regulations

Re: Did your credit card company raise your interest rate ? ...

hey, i just received an "important account price increase notification" from amex,  (i was not late) and it says the are changing my apr from a fixed rate to a variable, "as of august 1, 2009, the prime rate plus 11.9 is an apr of 15.24 and a dpr of 0.0418.  but it also says this does not go into effect until october 1, 2009...does that mean i still have time to opt out...and nowhere on this paper does it say anything about opt out instructions...i guess amex doesnt want you to know:)
 

Re: Did your credit card company raise your interest rate ? ...

Even in times of crisis we can still talk about competition and let's face it, competition in credit cards industry is pretty tight. If opting out is an option available for all of us then I don't doubt we would all vote for it. Thanks for informing us on this, many people still don't know what their real credit card options are. Albert.

Re: Did your credit card company raise your interest rate ? ...

They will actually be a little more helpful then a visa or mastercard since they aren't the biggest player or have a real low interest credit card you can negotiate with them or just tell them you'll close your account and just use visa / mastercard since it's accepted everywhere.

Re: Did your credit card company raise your interest rate ? ...

Chase raised my interest to 28% after a payment was received supposedly 2 days late. I called to ask them to waive it since Ihad nver been late before, They were extremely rude on the phone and told me basically "too bad". This has accumilated over the past few months to make my balance go over my credit  limit as well as added late fees since I can not afford to pay the min amount they want which is almost as high as my mortgate. Since, my Discover card has raised my rate as well although I have never been late  also putting me over my credit limit etc- I have heard that these card compnaies can share info and raise rates based on another companies info on you. is this right? This is going to cause me to go bankrupt.

Re: Did your credit card company raise your interest rate ? ...

I provide legal representation to folks whose interest rates are hiked. Mark Bonner; 127 NW 10th St.; OKC, OK 73103. (Anywhere in the nation through local counsel.) Feel free to write or send an e-mail if you are looking for financial relief. lmb@nemw.com.

Re: Did your credit card company raise your interest rate ? ...

savingtools's picture

"Two of my credit cards doubled my rates. Other than opting out, or accepting the higher rate, is there anything folks like us can do?

More importantly, is there any legislative effort to get the new credit card "abuse" law instituted earlier than 2010? Is there any point in writing my senators and congressmen?"

The only other practical thing you could do would be to move the balance either to another card, or pay it off using cash on hand or perhaps a home equity loan.

I don't suspect that there's much chance of the new law being moved up.  Right or wrong, the new laws will close down a revenue stream for the credit card companies, so Congress gave them a bit of time to figure out how to prepare for that.

I'm not saying that's right, but it is the reality.   It will be interesting to see what new unsavory practices the credit card companies put in place to make up for the revenue loss.  They could, for example, switch to a strategy where all newly issued cards are variable rate cards.  The new laws exempt variable rate card from several of the new protections.

 

Re: Did your credit card company raise your interest rate ? ...

Two of my credit cards doubled my rates. Other than opting out, or accepting the higher rate, is there anything folks like us can do?

More importantly, is there any legislative effort to get the new credit card "abuse" law instituted earlier than 2010? Is there any point in writing my senators and congressmen?

Thanks, Matt

Re: Did your credit card company raise your interest rate ? ...

QuintonP's picture

One of the most successful financial services outside of the banks and credit card companies (who can afford to lobby, we might mention) is under fire from legislative bodies these days. It's Washington DC that might be setting their sights on payday loan lenders next. Part of Obama's economic plan is to get a rate cap in place on all lending, and keep it at 36%, which makes payday lending untenable. Accusations of predatory lending are only backed up by anecdotal evidence, whereas the empirical (which means legitimate) evidence stacks up on the side of the payday loan lenders providing a needed service.

Re: Did your credit card company raise your interest rate ? ...

What happens if my credit card company doesn't give me the time to reject the higher interest? Can they do that? Indeed we are facing tough times that's why I want to be prepared for everything. Also it's a great advantage for customers to know where to turn to for help, this is not the case for those with a low interest credit card, they are just fine, don't need further support.

Re: Did your credit card company raise your interest rate ? ...

savingtools's picture

"There should be some law protecting consumers from hockers like this offering something in one hand while picking your pocket with the other."'

Yep.  The situation you described is one that's covered by the new laws that go into effect in 2010. It specifically stops credit card companies from raising interest rates on funds already borrowed unless those funds were borrowed on a card with a variable rate, or the minimum payment was late by more than 30 days.

The specific language, from the government's summary of the new rules is this:

"The final rule requires banks to disclose at account opening all interest rates that will apply to the account and prohibits increases in those rates, except in certain circumstances. First, if a rate disclosed at account opening expires after a specified period of time, banks may apply an increased rate that was also disclosed at account opening. Second, banks may increase a rate due to the operation of an index (in other words, the rate is a variable rate). Third, after the first year, banks may increase a rate for new transactions only after complying with the 45-day advance notice requirement in Regulation Z. Fourth, banks may increase a rate if the minimum payment is received more than 30 days after the due date."

So, they can increase the rate for new purchases, but not existing balances.  The only situations where they can increase the rate on existing balances is if the cardholder is more than 30 days late, or if the card is a variable interest rate card.  Of course, these laws don't go info effect until July of 2010, so we'll have to manage until then.

 

 

Re: Did your credit card company raise your interest rate ? ...

You know what I find fascinating?  WaMu, now Chase, in October 2008, offered me a new introductory rate for a new (read second) line of credit with them for any balance transfers I send to them on my new card.  I had a balance at a department store which I thought was high.  OK.  I'll open the new card and transfer this credit balance (which carried a finance charge of $30..It was still cheaper to do this)
I opened the new line and when I received my next billing statement for my first card, for some reason my rate on that first card was going to now go up from 14.99% to 25.99%!!!
I didn't think they could do this.  They offered me a new line of credit and when I accepted my credit risk went up (on the new line of credit with the SAME company) so they were able to raise my rate on my original line of credit with them. 
I believe someone wondering how they could raise their revenues thought it would be a good idea to try to find ways to raise rates on their existing customers.  They seemed to have found a way to do this. 
NEVER believe that a new introductory rate at 0% doesn't come with some kind of strings attached.  If you are ready to pay out the nose on your other cards, then go for it.  Otherwise, I say we all just stop taking any credit at all and let those slimeballs FAIL.
I had an opt-out (because I was never late).  But I didn't catch the notice to the raise in my rate in time and missed my opt-out deadline.  So, now I'm straddled with a new higher rate on my first card!!  AND the ONLY change to my credit rating came from the new card they offered me at 0% until May, 2009.
I say this is a scam just as big as any other out there.  There should be some law protecting consumers from hockers like this offering something in one hand while picking your pocket with the other.

Re: Did your credit card company raise your interest rate ? ...

savingtools's picture

I suppose least hassle would be these steps...

1) Gather your cancelled check, or your online banking statement, so that you have some proof of sending payment.

2) Call the company and plead your case.  Escalate to a supervisor.   Be prepared to spend 30 minutes to an hour on the whole process plus whatever the hold queue time is.

3) If you have no luck with that approach, cut your losses. Apply for a different loan ( or credit card? can't tell what RBS is ) with better terms with another company, and pay off the higher interest debt. 

Re: Did your credit card company raise your interest rate ? ...

RBS raised my interest rate because they say my payment was two days late.  I mailed the payment 8 days before the due date.  They raised my rate from 3.99% to 19.99%.  I have no late payments for the life of this loan.  It was supposed to be a good rate until the loan was paid off.
How on earth can I know when they received the payment?  I see the need for the new legislation, but am I stuck with this interest rate.  I want to pay this balance off by getting a loan from my credit union.  Must I pay that 78.00 interest under the new rate in order to settle the account.  I want the late fee refunded and to pay off the balance with the 15.00 original rate.
How would you suggest I do this with the least hassle or what do you advise?

Re: Did your credit card company raise your interest rate ? ...

savingtools's picture

I never received notice that they would raise my credit card.  I was pretty much told too bad.  I cancelled my cc but am stuck with the high rate.  Is that legal?

 

Unfortunately, it is.  They are only required to give 15 days notice, and it can be a small note inside of your current bill, or fine print within the bill.  There are new credit card laws, however, that go into effect in July of 2010, that happen to specifically address this kind of abuse.  Under the new laws, Consumers must be given 45 days' notice, instead of the common 15 days' notice now given before slapping on a higher penalty rate.

 

Re: Did your credit card company raise your interest rate ? ...

I have  an Advanta credit card.  I noticed on my bill that they had raised my rate to 24%.  I called to ask them why and got the reason as high debt.  I never received notice that they would raise my credit card.  I was pretty much told too bad.  I cancelled my cc but am stuck with the high rate.  Is that legal?
 

Re: Did your credit card company raise your interest rate ? ...

greenmachine's picture

That's news to me! Thank you. I'll keep that in mind and will spread the word too. No surprise is it that they don't make it easy by supplying you with a form.

Re: Did your credit card company raise your interest rate ? ...

savingtools's picture

Congratulations on getting the 1% reduction! Yes, AMEX is very arrogant, but hold your ground.

Re: Did your credit card company raise your interest rate ? ...

One of my cc and one of my husbands have both raised our rates for no reason! His company actually ended up lowering his rate by 1% for 6 months and that he can call at that time and be re-evaluated again to hopefully a lower rate. I have to call my cc company tomorrow and AMEX is never friendly!