The interest rates will increase for everyone to be “fair”.
Remember when credit card interest was deductible. Is Obama going to add a government “fee” to our accounts??
Another classic example of the Government in solving one problem, create 3 or 4 more other problems as a result. The card companies will simply make up the difference in other even less friendlier ways. Late and over limit fees increase, card holders who pay off their balance each month may be charged an annual fee. Interest rates increase across the board. And say goodbye to perks such as cash back, or flier miles.
Already happening. Just today (about 30 minutes ago), I arrived home, checked the mail and found a mailing from my only credit card (used primarily for my work expenses, almost always a zero balance as it is paid in-full every month... except this past January when I carried a small balance over to the following month. NEVER late.
The notice was to tell me that the interest rate was going up. Not just a small amount either - it is going up by over 50% of the current rate.
Of course, they let me know well in advance - any purchase made after July 2, 2009 will be assessed the new higher interest rate starting in January 2011. Now - according to my current practice, this really won’t affect me, as I generally pay off my full balance each month. But still - the concept is there - I am being treated like a loser who doesn’t pay on time (the original agreement had a promo rate of zero%, then went up to what I consider a “reasonable” rate after and was suppose to be permanent - only going up if payment is made late more than two times in a calendar year and for a couple of other reasons also related to late payments). Of course, there is always that clause that says the agreement can be amended in writing with advanced notice. I guess this is it.
And of course, the only “Opt out” action is to call or write them and close the account. Unfortunately, closing credit accounts (even if it has a perfect payment record like ours) causes a major ding in your credit score (which I think is completely unfair). Considering that I just made a drastic employment change this past Fall, and we moved at the same time - we have already taken a hit in our supposed “creditworthiness”. Doesn’t matter that income is the same or slightly better than before, and cash flow is better...
The “reason” given for this increase on this notice reads as follows:
“This increase is based on your account’s current Purchase rate, the length of time you’ve had this rate and account, as well as the challenging economic environment.”
I guess they don’t like folks paying their balance each month, ON TIME.