Credit Card Rates

[waziggy]

Curious from reading another thread that when you miss a credit card payment the credit card company may up your interest rate. The one I read said it went from 9.9% to 26% and the theme is if you can't pay it at 9.9% what chance does one have paying it at 26%. This seems like it probably forces an individual to seriously consider BK which means the credit card debt would be discharged and the company receives 0. What's the view out there from everyone. Does this force most folks into BK? Does the credit card company re-adjust the rate down if you simply say you're filing Chapter 7 immediately due to their hiking the rate up? What's folks experience in dealing with rates rising and maybe then falling when you contact them about the situation your in seeking relief. Anyone call the local TV station consumer reporter getting them involved (shame the credit card company) after losing a job? I know locally Duke University Medical Center got shamed by a local reporter after threatening to foreclose on a senior citizen when their husband died and Medicare didn't pay half the bill. Duke's attorney was going after the house. The TV reporter showed the little old lady who was in her 80's and just buried her husband - suddenly Duke announced her debt was being zeroed out as an act of charity. Duke didn't want the press of making street people out of octentarians.

[HHM]

I imagine its a numbers game for the Credit Card companies. CC companies make money two ways, on the interest and fees they charge consumers and the transactions fees they charge businesses. Even though hiking the intererst will push some people over the edge into BK, most don't file BK and continuing paying. The excess interest is how banks (who issue credit cards) can absorb the loses of bankruptcies, charge offs, etc
I imagine the banks are "banking on" that a certain percentage of those that get their interests rates raised will pay for those that stop paying on the account or file bankruptcy.

[mylife05]

Very good answer HHM. Thank you.

I don't know why I'm replying, other than the fact I am outraged at the cc companies and their interest rates. The little angel on my shoulder - or something :p - keeps causing these guilty feelings for filing Ch.7, and not paying off my debts, but then I think of all the stinkin' 26% and 29% interest I've been paying and I know that I have paid those people PLENTY of money. SURELY I have paid them the amount that I originally charged by now, at least once . And then my guilt slinks away into the corner. ;) I always paid on time, but my ex kept missing payments on joint debt (cc and carpayments), and THAT is what caused MY cc companies to hike up my rates. THEN, one cc screwed up an online payment and refused to make the correction and piled on late fees and interest - blah blah. Jerks.

To more directly address your topic (and stop my venting ), I successfully negotiated with a cc (MBNA) one time after they hiked up my rate. I'm not sure why they gave in, or what I said, but I remember using the logic that if I was having trouble paying at 18%, how in the world could I remain current, and make "more than minimum payments" at 25%? But they agreed and kept the lower rate.

Does the credit card company re-adjust the rate down if you simply say you're filing Chapter 7 immediately due to their hiking the rate up?

I'd be curious if anyone's had experience with this. I would think NO... that they don't give a flip about it... that they don't play "threat" games with folks. They probably assume that you will file anyway, so they will get as much interest as they can before you file. I would think they only lower rates if you successfully present a plan for repayment (yourself or through a 3rd party). But I'm certainly no expert by any means. Just my thoughts. I'm curious to see other opinions.

[drowningindebt]

I am so disgusted with credit card interest rates, I can't stand it! It makes me so angry that most of us here truly wanted to take responsibility and pay off our debts, but creditors make that nearly impossible. I had a similar sitation to others--moved to a city and had trouble making ends meet so I ended up using credit for a couple of years to help pay for necessities. A few years ago I stopped using them and tried to get serious about paying down my debt. After *one* late payment to Citibank, they increased my rate from 8% to 23.9%. Soon after, two of my other cards increased my rate to between 20 and 30% even though I had never been late on either of those cards. Seriously, if you are having trouble paying it at 10%, how can you possibly keep up at 30%? I tried to negotiate with the companies and all but one said no. All were very VERY condescending. I tried everything I could do to stay out of BK7 but was backed into a corner by aggressive credit card companies who seem to raise my rate if the wind shifts the right way. Now, because I had to file BK7, they will get squat. It's disgusting the way that they operate and the way they take advantage of people. I absolutely own up to my irresponsibility in the way I handled my finances but I feel CC companies are just evil and looking to pray on the weak who they know have no way out. Sorry to rant but I really can't even believe that some of this "rate-jacking" is legal. Why isn't this considered usury? Why is it legal to change the terms of a credit card agreement that you've signed even if you've always paid on time? Didn't there used to be laws against "loan sharking"? Are there any consumer advocates out there working on this? I feel like it's a "silent problem" because debt is so embarassing and very few of us are willing to stand up and say how we have been mistreated.

Thanks for letting me rant. Take care all!