Can a credit card company suddenly increase your APR just because they reviewed your credit report?

Question

I recieved a letter from a credit card company i've been with for some time stating that "due to information recieved on my credit report" they were hiking my interest rate. I haven't paid late at all on this card and nothing has changed that I know of on my credit report. Is it even legal for them to do this and is there a way to fight it????

Answer 1

Remember those "cardmember agreements" that you receive in the mail from your credit card company? Those are the "rules and regulations" for maintaining an account with the credit card company. In the "cardmember agreement" there will be a clause (paragraph or more) advising you that they are going to review your credit on a periodic basis and if you are past due with others they will raise your interest rate. It is part of a phenomenon known as "risk based lending". They are assuming just because you didn't pay another creditor that you aren't going to pay them either.

It is legal and currently there is no way to fight it. All you can do is try to get another credit card with another company with a better interest rate (and of course, no annual fee) and transfer the balance from the original account to the new account. Even with the balance transfer you have to make sure that you are not going to be charged the "cash advance interest rate" since it is always higher than the "purchases interest rate". You'll also want to make sure that you don't have to pay a "cash advance fee".

It is legal and until someone (hopefully our government!) does something to curb the exorborant interest rates and fees charged by the credit card companies they are just going to keep gouging the consumer. Write your senators and representatives and complain!

Answer 2

It's perfectly legal for them to review your credit report and adjust your credit card interest accordingly. It doesn't matter if you've been late with them or not. If you were late with anyone they have the same fear that you could be late with them. That's why it's important to keep ALL loans and credit cards current. You may want to shop around for a lower interest rate card but watch out for balance transfer fees or it may not be worthwhile. Your mission should be to pay off all debts as quickly as possible... don't cancel the cards... but increase your credit score with on time payments and a lower debt to income ratio and a history of credit cards over time which is why I say don't cancel cards. You don't have to have balances on a card to keep it active. Try to get to the point of having just one credit card, the oldest, and paying it off monthly. Sorry there's no way to fight their decision to increase your rate except to take your business elsewhere. If you've gotten yourself into the bad rating then you'll get the same treatment elsewhere too.

Answer 3

Yes, they can. Folks, read your terms and conditions when you sign up for a card. It's quite likely the credit card company saw that you were delinquent or late on another account. The language in most credit card agreement states that they can raise your rate if you are delinquent on ANY credit agreement, even if its with a different creditor.

Answer 4

This is something new. And if this isn't a RIP OFF, I don't know what is! Just by looking at your credit report if they FEEL you are using too much of your credit line or if they FEEL you are taking on too much debt, they can jack your rate!!! And who knows what else they look at...and guess what, there is nothing you can do about it!

Best thing to do is to pay it off as soon as possible and take your business elsewhere!

Answer 5

I have been given a similar variety letter, additionally from Capital One. I infrequently ever pay previous due (or maybe then it somewhat is in basic terms through a few days) so i grew to become into distinctly offended approximately it. i'm no longer likely to cancel it however. I surely are turning out to be rid of it from my wallet and could no longer use it back (except it somewhat is a dire emergency). i've got had this credit card for somewhat a whilst and (so some distance) I nonetheless have a distinctly extreme credit cut back on it, so it may in basic terms harm my credit if I canceled it. credit card companies are all doing this in hopes that human beings (who're nonetheless credit conscious) will pay off their debts, yet i think of it somewhat is going to easily turn genuine around and chew them interior the butt. All they'll accomplish through elevating fees interior the process a recession, is to make much greater human beings default on their money. Now, much less of your month-to-month value is utilized to the vital which only skill it somewhat is all that lots harder to ever get out of debt. while human beings ought to be sure between paying their credit enjoying cards or feeding their families, i'm having a wager they're going to chosen to take care of their kin first and only bypass into default on their enjoying cards. everybody is being pushed to a factor the place their debt is so some distance long previous that they do only no longer care anymore. and that i do no longer blame them. i think of what the credit enjoying cards are doing ought to be unlawful. how are you able to strengthen fees during a recession, and not harm thousands and thousands of lives? i'll maintain my Capital One card in basic terms with the aid of fact it advantages me to accomplish that. If Capital One lowers my credit cut back when I pay them off, THEN i'll cancel with the aid of fact it wont earnings my credit checklist anymore. And, after the recession while Capital One sends me an exquisite letter asserting how lots they desire me back, i'll teach them not greater loyalty or admire than what they have shown me.