Please comment on this credit card company's behavior

[pandacb]

We are late with our mortgage but nothing else at this point. In fact we have never been late on any of our credit accounts. We have one card that has a very high (20k) balance. Without notice, in November, 2009 the interest rate went up by 7%, to 24.97%. This upped the min payment too much for us and so we contacted the credit card company. Asking for a reduction in the interest rate and/or a hardship plan. The company flatly refused any help at all. The next payment on this card is not due until the last week in February. Yesterday we got note on their company stationary stating that while they appreciated our efforts to pay our debt, they would now accept nothing less than the whole amount owing on the credit card. Can they do that? Has this happened to others?

[albacore44]

yes they can. Are you planning BK in the future ?? if so, i would stop paying now and tell them to blow it out their azz. Its this kind of crap that is forceing the whole country into BK. let them reap what they sow.

BTW- which bank ??

[pandacb]

It Union Plus Mastercard with Household Bank. Online it looks like it always has with the payment due later this month...I did not know credit cards have an acceleration option if you have not ever been and are not late.

[flyinbroke]

Unfortunately, they are all playing beat the deadline for the new laws and it is the wild wild west with credit cards. They can do what they want and they don't need a reason, since their "contract" with you is one sided and can be changed by them at will.

Basically, they raised your rates sky high while it was still legal for them to do so. Personally I would have blown off the card and paid for the roof over my head. I would still blow off the card.

[WhatMoney]

The banks are preparing for the Feb. 22 CARD Act Part 2 changes, by extracting everything they can out of you while it is still "legal". Apparently by demanding full payment while you are still paying monthly, they place you in full default on the debt immediately, instead of just the payment due. Not much difference since you cannot pay it back anyway. There is no reason to give them another cent! They could not pull this on you after Feb. 22.

Here are the CARD Act provisions effective Feb 22 and Aug 22, 2010:

Effective February 22, 2010:

* Credit card issuers will not be able to increase interest rates on existing credit card balances unless the borrower is at least 60 days late on the account. This will eliminate the retroactive rate increases and the universal default clause where credit card issuers would periodically review an account holder’s current credit standing to determine changes in terms and annual percentage rates.

* Credit card issuers will have to provide clear disclosure of account terms before a borrower opens an account. If the account provides a promotional interest rate period, the promotional interest rate will have to last a minimum of six months.

* Credit card issuers will not be able to raise interest rates on new credit card accounts during the first year the account is opened. This rule will not apply if the borrower falls 60 days late on a credit card payment.

* Credit card issuers will not be able to charge over-limit fees unless they obtain the account holder’s consent to accept and process over-limit transactions beforehand. If consent is obtained, the card issuer will not be able to charge more than one over-limit fee per billing cycle. Additionally, credit card issuers will not be able to charge an over-limit fee if interest charges or other fees are the sole reason for pushing the account holder over their limit.

* Credit card issuers will not be able to charge additional payment penalties for accepting payments by mail, phone, electronic transfer, or any other means, unless the payment is processed through an expedited service processor.

* Credit card issuers will face significant hurdles if they try to issue credit cards to consumers under age 21 without an “of-age” co-signer, unless they meet sufficient income requirements to independently repay the debt.

* If a due date falls on a weekend or holiday, the credit card issuer will not be able to penalize mailed payments that are received on the next business day. Payments received by 5 p.m. must be credited the same day.

* Double-cycle billing, a process where credit card issuers use the previous month’s balance to calculate interest charges for the current month, becomes illegal.

* Credit card issuers will be required to apply any payment above the minimum amount due to the highest interest balance first.

* Subprime or “fee harvester” credit cards will have fee limits. Fees on a credit card (other than late fees, over-limit fees, or insufficient funds charges) will not be able to exceed more than 25 percent of the credit limit when the account is opened.

* Credit card issuers will have to include a minimum payment disclosure that explains how long it will take to pay off the existing balance and the total cost in interest fees if the cardholder paid only the minimum amount due. Additionally, card issuers will have to provide minimum payment details and the total cost in interest to pay off the existing balance within 3 years (36 months).

* Card issuers will have to make account terms and cardholder agreements available to their cardholders on the Internet.

Effective August 22, 2010:

* If a borrower’s interest rate is increased due to being 60 days late on a credit card payment, the credit card issuer will have to revert back to the original rate after the borrower completes six months of on-time payments.

* New rules will limit fees on gift cards and stored value cards. All gift cards will require a minimum expiration clause of no less than five years. Inactivity fees on gift cards will be banned.

http://www.creditbloggers.com/2010/0...f-georgia.html

[tigergem]

Ok, I don't get (at all) what they are hoping to gain from doing this? More defaults? More BK filers? Where is the profit motive in that?

[lrprn]

Ok, I don't get (at all) what they are hoping to gain from doing this? More defaults? More BK filers? Where is the profit motive in that?

Believe me when I say the cc companies were not willing to police themselves and do the fair thing for their cc card holders. Therefore Congress passed a law to compel the cc companies to accept these new rules earlier this year.

The goal is for current cc card holders to be treated fairly. No longer can the cc companies just do what they want whenever they want. By legally stopping many of the outright abuses that cc companies forced on their customers just to increase their short-term profits, hopefully now *LESS* people will have to file bankruptcy because they can't pay down what's owed on their cc cards.

[DebtHater]

When you signed the CC contract I'm sure there was no disclaimers that they had to entertain less than was owed should the account go in arrears.

I do ask this question: Why did you choose to default on your mortgage as opposed to the CC's? Credit cards are unsecured and the worst that might happen is they will sue you down the road. For defaulting on the mortgage you lose the house!

[pandacb]

We are in a trial modification for our mortgage...we first applied for Making Home Affordable modification in August, September, October and November of 2009 but our paperwork was "lost" each and every time. Then we were told that the papers were "lost" because we were current. So we did not pay our December payment and "bingo" our papers were "found" we were screened for the mod and now we are waiting for the trial payment package that is supposedly on the way. That's why we are late on the mortgage.

As to the credit card, I understand things change when you become delinquent...that's my point we aren't delinquent, yet anyway...just asked them to put the interest rate back where it was before they raised it for no reason except that they can and with no notice.

Thanks for your comments.

[WhatMoney]

As to the credit card, I understand things change when you become delinquent...that's my point we aren't delinquent, yet anyway...just asked them to put the interest rate back where it was before they raised it for no reason except that they can and with no notice.

So what are you going to do about the credit card debt? If I understood you they now want the entire $20K balance paid immediately to them or nothing? - which doesn't leave you with much choice. The "call in" of your CC debt was probably triggered by your missing the December mortgage payment, and the CC using the "universal default" policy to default your card unless you pay it all off. You can't win with the old rules which are still in effect until the 22nd.

[forgotten]

The "call in" of your CC debt was probably triggered by your missing the December mortgage payment, and the CC using the "universal default" policy to default your card unless you pay it all off. You can't win with the old rules which are still in effect until the 22nd.

I love the thinking at banks... "You can't afford $400? Well, in that case you need to pay the entire 20k balance." You see... I don't have $400, I only have $20,000.
My theroy still holds true... banks don't really care if they get paid or not. You pay on their terms or you don't pay at all, doesn't really bother them either way.

Heck, Bank of America couldn't even be bothered to fill out a one page claim form in my chapter 13 to get paid back 20% of the $38k I owed them.

[DebtHater]

I love the thinking at banks...

That's an oxymoron if I've ever heard one. It seems incompetence is a prerequisite for these "bankers".

[Bell30656]

I would say that the reason for the sudden interest change and demand for payment was a cross default clause in your original agreement. Many credit card companies have put a clause into their agreements that says if you default on any credit card or loan they can treat you as if you are in default on this one and raise the interest rate or demand full payment accordingly. Read the mice type on the original.

When you went delinquent on the home loan they decided that you would be a higher risk to them. All these new rules on the credit card companies are good on one hand but bad on another. While they will protect us consumers from some of the underhanded terms that we agreed to in our contracts it will on the other hand make it that much tougher to get credit cards as companies will only take risks when the rewards match the risk.

Sooner or later us consumers will refuse to sign any agreement filled with mice type. I'd love to see a bank advertise no hidden fees.

[catleg]

I understand what you're saying, but look at this the other way, this cross-default nonsense is just going to force consumers to default on everything once they have defaulted on anything. Kind of crazy logic, makes perfect sense to the banksters though.

I guess they're pretty confident of their ability to get people owing balances at 30% default APR's to pay up. I suspect that largely depends on their ability to recover through liens on real estate and wage garnishment. In today's economy that just doesn't seem likely.

[tigergem]

That's an oxymoron if I've ever heard one. It seems incompetence is a prerequisite for these "bankers".

Oh. You mean - - even I could work there?