This recession does not look like it will be coming to an end anytime soon. Thank God I still have a job and a fixed rate mortgage but yeah, like millions of other Americans, I am concerned. It seems like companies are announcing layoffs everyday. Even so, I remain prayerful so it isn’t keeping me awake at night.
Also, like many other concerned people, I am paying closer attention to the financial news particularly regarding the banks and credit card companies. A couple of months ago, a news program ran a story about credit card companies either decreasing limits or raising rates on customers with stellar repayment histories. (You can read a recent story HERE.) I kept an eye on my card and wouldn’t you know it, I received a notice from Chase that my low rate of %5.99 was going to more than double, thereby doubling my minimum payment.
I immediately got on the phone with a representative and then a supervisor who both informed me my only option to keep that rate was to close the account and continue to pay it off. The supervisor attempted to reassure me that it was nothing that I did or did not do that triggered the rate increase but rather in these tough economic times Chase was making an attempt to continue to meet their bottom line, even if that means screwing their customers who played by the game.
If you have a credit card, pay on time, never go over the limit…the CC company can do this to you. It is spelled out in that agreement you sign when you initially open the account. In short what is says is that for whatever arbitrary reason the bank deems necessary they can increase your rate whenever regardless of circumstance.
We are being penalized for matters that are out of our control and there is nothing we can do. Well, there is one thing and that is to pay off your credit and pay cash for everything. I did this for years and now I return to that practice.
Now if you’re over 30 there is a good chance you are aware of how this credit dance works. You know consumers have to find the right balance of installment and revolving credit, debt to income ratio, and repayment history to get and maintain a good credit score. Closing accounts could potentially count against you.
Damned if you do. Damned if you don’t.