my girlfriend has a bank of america credit card that started out at 9.99%..they raised it, for some unknown reason to 14.99%..she called them and asked them why (she’s never been late on a payment, has a credit rating over 700 etc. etc.)..when they really couldn’t give her a reason, but refused to back the rate back down, she told them she wanted to close they account. they told her that if she did that, the account would automatically revert to “charge off” status since they couldn’t be sure she’d pay the balance (which she would) AND the interest rate would rise to 32.99%..
needless to say, she simply tore the card up and has only $300 more to pay till it’s paid off at 14.99%..
Another member of my family had a card with Wachovia that was part of a portfolio bought by MBNA and then Bank of America. After twenty plus years of on-time payments, never going overlimit, etc., Bank of America lowered his credit limit to $100 below his balance, defaulted him (increased his rate from 8.99% fixed to 22.99% variable), and then restored his credit line.
Oh I dare say there’s more to her story than that. I know; been with BofA for a good while, have a platinum VISA with ‘em, etc. Never seen such behavior and wouldn’t tolerate it if I did. There ARE contractual terms with any c.c. provider. I’m guessing she got an introductory rate or some such.....
They will raise the rate for a variety of reasons, many may having nothing to do with one’s payment history with that particular company. But certain activities that get put on your credit report may cause them to raise your rates, or even simply taking on additional debt they will raise the rate. Sometimes they just raise it for the heck of it. Many rates are simply usurious and these companies are no better than loan sharks.
That said, I think the smart thing (since raising the rate if they feel you may have trouble paying off the debt is rather counterintuitive) would be to make credit a little more difficult to get, certainly the ability to get multiple cards, but keep rates reasonable so people actually can keep up and pay the debt in a reasonable time frame. When that’s the case they are less likely to default. IMHO anyway lol