Credit card limit reduction and interest increase

[boont]

Usury Laws

I use my credit cards and lines of credit to keep them active and my credit score high. Use it or lose it, is the rule. I even let a balance ride once in a while to further pump up credit rating. Last time I bought a house I was over 800.

When Chase Master Card wrote me saying they were raising cash advance and over draft to about 32% annual fee I called them.

I said interest rate usury laws were suspended in the 1970's because of inflation, we are now in deflation, what gives? Usury laws still exist in some states.

He said, "You are not carrying a balance". I said, I am not calling for myself, I'm calling for all the poor smucks that are losing their jobs while you jackasses push them over the brink. "Didn't we just give you guys 250 Billion tax payer dollars. I'm calling as an owner.

I also called my senator and congress person to complain about this suspended usury law. I think it should be reinstated.

boont

 

[FANOFJESUS]

I only have one credit card that is all I want. It is with a credit union because I trust them more than banks.

 

[OAG]

Read someplace (don't remember where now (senior moment)) that Credit Card Companies consider people who pay off the balance and never incur any type of penalties are "DEADBEATS" in their eyes. Which, may or may not, explain why they are cutting limits and fiddling with the interest rates for us DEADBEATS.

 

[ERD50]

I also called my senator and congress person to complain about this suspended usury law. I think it should be reinstated.

boont

I do not understand this line of thought. Why should your congress person get involved in a private transaction? Should I call mine when I buy a car, TV or house to see if it is a good deal? How about beef versus chicken? If the interest rate is too high - don't borrow money from them. Period.

.... Credit Card Companies consider people who pay off the balance and never incur any type of penalties are "DEADBEATS" in their eyes. ....

I keep hearing this, but my CC companies sure have an odd way of showing their disdain for this 'deadbeat'. They keep giving me money and rewards to use their cards this way. Why do they do that if they don't like me? They even sent me flowers last year (I would have preffered cash).

-ERD50

 

[OAG]

I do not understand this line of thought. Why should your congress person get involved in a private transaction? Should I call mine when I buy a car, TV or house to see if it is a good deal? How about beef versus chicken? If the interest rate is too high - don't borrow money from them. Period.



I keep hearing this, but my CC companies sure have an odd way of showing their disdain for this 'deadbeat'. They keep giving me money and rewards to use their cards this way. Why do they do that if they don't like me? They even sent me flowers last year (I would have preffered cash).

-ERD50

I guess "it depends" on who you have. PENFED treats me just fine too with the 5/2/1.25% (Gas/Food/All others) monthly cash rebates too.

 

[ERD50]

I guess "it depends" on who you have. PENFED treats me just fine too with the 5/2/1.25% (Gas/Food/All others) monthly cash rebates too.

So it sounds like there is a relatively free market in credit cards. That's good. Sounds like people just need to think a little, rather than expecting the govt to take choices away from them. I should be able to determine what is better for me than some guy/gal over there in DC.

I should get a pen fed card. My others are AMEX and a Chase through Amazon. As another poster mentioned, a good idea for you and spouse to each have a separate card in case a wallet is stolen or missing.

-ERD50

 

[Finance Dave]

If your credit card limit is lowered, does that change your FICO score? I read somewhere that FICO score is partly determined by your available credit?

tmm

Yes. Part of the FICO score has to do with the % of available credit you're using...so a lowering of the limit would put you at a higher percentage...that is unless you NEVER charge anything.

I charge almost everything I buy...and then pay it off in full each month. My bill is therefore quite high, but that's ok with me. I still only use about a third of the rediculously high limit they give me.

 

[Finance Dave]

Read someplace (don't remember where now (senior moment)) that Credit Card Companies consider people who pay off the balance and never incur any type of penalties are "DEADBEATS" in their eyes. Which, may or may not, explain why they are cutting limits and fiddling with the interest rates for us DEADBEATS.

This is true, they don't like us. But in effect we are still paying for the card...as businesses must build the cost of their payments to the CC companies into their overhead, and thus their prices. In other words, if we went to an all cash system tomorrow, in theory prices could drop about 2-3%.

Last time I bought a house I was over 800.

boont

Lenders love people like you. My FICO is 806, and my wife checked hers and laughed at me because hers is 807. I knew there was a reason I liked her when we first met at age 30.

I bought a car a few years ago and they offered a zero % loan for 2 years, so I took it. They needed to run a credit check. The guy says to me "If I can't get you this loan, then I need to find another line of work".

 

[boont]

Public Rescue

"I do not understand this line of thought. Why should your congress person get involved in a private transaction?" ERD 50

You act like we never had usury laws. Well, they go back at least 2000 years.

Why should congress get involved? Because they write the laws. This is corporate theft. The banks purposefully set up credit rules to profit on the high probability of an error by the customer.

Is it possible to read all the fine print (which keeps changing) to keep track of all the rules you must follow to not breach a penalty and be forced into a new higher interest rate on your account? No. The banks count on that, increasing penalties to add to their profit.

Now that they have taken public money they are subject to public pressure and new rules. It is no longer just "a private transaction", we are way beyond that.
b.

 

[Walt34]

We opened a new cc account (first time in about 15 years) for the purpose of the 0% rate for one year for refinishing floors in FIL's house. The bank is of course hoping we don't have the full balance (which we do) at the end of the year and then we'd have to pay the 24.99% interest rate retroactive to the date of purchase.

They're going to lose on that bet. The money is currently earning interest for us and if they want to give us a free loan so be it. I suppose there are enough suckers out there to make the bet worthwhile or they wouldn't do it.

 

[clifp]

In the days of easy credit having several card with high limits was nice. Take advantage of the zero percent balance transfer offers, stick the money in the money market, pay the minimum on the zero percent and use the other card for normal expense. Rinse and repeat for different cards.

Now days it doesn't matter much, since my credit utilization is never 10%, but still I am annoyed when companies cancel cards just because I haven't used them.

 

[Bestwifeever]

Just got back from Home Depot (best experience ever--older easy going salesman confirmed our decision to buy the cheapest gas dryer, free shipping, dh got 10 percent veterans discount (thanks to this board and OAG's thread about it yesterday , salesman automatically checked "no" for extended warranty, etc.). Once all our purchasing info was input, good to know we are also preapproved for their $10K card (nice salesman handed us the paperwork and said we could do what we wanted with it even though we saw the HD computer screen that advised him to urge us to accept it).

 

[Caoineag]

No drops in limits though have seen the raise in interest rates. I was very annoyed by that more for other people than myself. Haven't used the card since. Once the mortgage is in place, I am pretty sure I will call and cancel.

In fact one of my cards just raised my credit limit and another two offered me lower interest rates. I am also one of those terrible people who will sign up for a store card for the 20% discount so I have more than just 3 cards. My score was 747 for the mortgage so I will live, especially since the bank's best rate was reserved for 720+.

 

[ERD50]

"I do not understand this line of thought. Why should your congress person get involved in a private transaction?" ERD 50

You act like we never had usury laws. Well, they go back at least 2000 years.

I don't care. We had lots of laws in the past that we don't have today. And it is progress.

Why should congress get involved? Because they write the laws. This is corporate theft.

I don't consider signing a contract 'theft'.

The banks purposefully set up credit rules to profit on the high probability of an error by the customer.

Is it possible to read all the fine print (which keeps changing) to keep track of all the rules you must follow to not breach a penalty and be forced into a new higher interest rate on your account? No. The banks count on that, increasing penalties to add to their profit.

You have a point there, I tend to agree. Two solutions:

1) If we are to have govt regs, focus them on standardizing the language. Create a "plain English" document to explain the terms.

2) Largely because of all that fine print - I recc people avoid CC debt like the plague. Problem solved.

I've never had a fine print problem. I pay my bill on time and fully, and they keep throwing money at me.

Now that they have taken public money they are subject to public pressure and new rules. It is no longer just "a private transaction", we are way beyond that.
b.

Fine, so do #1 above. I still don't see the point of regulating what someone will pay for something. You did not respond to my question:

Should I call mine (congress person) when I buy a car, TV or house to see if it is a good deal? How about beef versus chicken? If the interest rate is too high - don't borrow money from them. Period.

What makes a loan any different from anything else I might buy?

-ERD50

 

[jazz4cash]

Two accounts have raised our limits and still sending low interest balance xfer offers, but the transfer fees are 3% or so....ridiculous. We carry balances on several cards but the max is 4.99% and we also use the Penfed card which sometimes has no fee balance xfer promotions.....last one was 2.99%

I am not sure but suspect FICO scores are reduced by piling debt onto the lowest rate cards even though overall utilization is not affected.

 

[boont]

Laze faire (Let it Be)

"Should I call mine (congress person) when I buy a car, TV or house...?" ERD 50


You make my point for me. Congress has already passed laws on both these things. If a car salesman tries to sell an elderly person a huge R.V. that they don't need and can't afford, for instance, there is Elder Law to protect the buyer. The dealer can be made to take the R.V. back and refund the money.

There are also grace periods for returning vehicles and even real estate to stop high pressure abuse.

Not everyone is as smart as you. Some people need protection from crooked sales people. Especially the elderly and even some military and students.

These are needed laws already on the books. We already tried anything goes capitalism both in the 1890's and lately in the 2000's. It didn't work either time.

Surely, you have noticed.

boont

 

[Independent]

So it sounds like there is a relatively free market in credit cards. That's good. Sounds like people just need to think a little, rather than expecting the govt to take choices away from them. I should be able to determine what is better for me than some guy/gal over there.

-ERD50

It seems to me there are two markets in credit cards. One is the various banks who issue them to consumers competing with one another. The other is the major CC companies "competing" for retailers. The second market is practically a duopoly. In fact, it's a rare retailer that's willing to go with only one of the two, many retailers feel that they have to have contracts with both to stay in business.

This gives the CC companies a lot of market power in this market. For example, in setting the difference between the amount the bank charges the customer and the amount the bank forwards to the retailer.

Now, what I don't know is whether retailers can provide discounts to cash customers. IIRC, at one time the contracts between the CC companies and the retailers prohibited discounts. I'm curious if anyone here knows the facts.

 

[ERD50]

Most people are plenty smart.

I didn't see anywhere in your post that indicated that usury laws were to be limited to certain members of society or based on age, IQ, or anything else. I was under the impression that usury laws apply to all. If we apply that to your RV case, it means RVs cannot be offered for sale period, because somebody who shouldn't buy one might. So nobody can.

The rest of your "anything goes capitalism" comments have been discussed in the SoapBox, and probably should stay there. Questioning the value of some regs is not the same as saying we should have none.

-ERD50

 

[ERD50]

The second market is practically a duopoly. .

Anywhere there is a duopoly, I think it is reasonable to look for ways to open up that market - even if the govt needs to get involved.

-ERD50

 

[harley]

Since we recently bought a new house I tried to get my credit limit raised on my rebate card because I was going to be spending a lot, with some of the purchases being pretty large. They rejected my request, with the rep telling me first that it was because I never carried a balance. I asked to speak to a manager, and then the story changed to being because my spending history didn't justify the new limit. They finally did it, but I had to agree to let them do a credit check first. It worked out in the long run, but I had to really press it.

DW has multiple CCs. She used to get all the store ones to get the 10% off first time use until I convinced her to quit. But they're still on the books. A couple of the companies have notified her they are shutting them down for lack of use, and a number of others have lowered limits and raised interest rates. It's not a problem for us since we only use one each and pay it off, but it's interesting to watch. Next time I check our credit reports I'm going to see if the decrease in the total credit limit has lowered her score.

 

[FANOFJESUS]

Since we recently bought a new house I tried to get my credit limit raised on my rebate card because I was going to be spending a lot, with some of the purchases being pretty large. They rejected my request, with the rep telling me first that it was because I never carried a balance. I asked to speak to a manager, and then the story changed to being because my spending history didn't justify the new limit. They finally did it, but I had to agree to let them do a credit check first. It worked out in the long run, but I had to really press it.

DW has multiple CCs. She used to get all the store ones to get the 10% off first time use until I convinced her to quit. But they're still on the books. A couple of the companies have notified her they are shutting them down for lack of use, and a number of others have lowered limits and raised interest rates. It's not a problem for us since we only use one each and pay it off, but it's interesting to watch. Next time I check our credit reports I'm going to see if the decrease in the total credit limit has lowered her score.

It should not be a big deal if she does not carry a balance.

 

[harley]

Well, they use the amount of credit available vs. your ongoing balance as part of the calculation. Her limit will drop, but the balance won't change. Our score is pretty high (790s) so I'm not worried, just curious. It will be interesting to see. I suspect those who carry balances and have their limits decreased will see significant drops in their scores. Part of the CC conspiracy.

 

[Helena]

Sears sent me a letter advising they had reduced my cc limit
due to inactivity. They're right, I hardly ever use the card.

 

[Finance Dave]

We opened a new cc account (first time in about 15 years) for the purpose of the 0% rate for one year for refinishing floors in FIL's house. The bank is of course hoping we don't have the full balance (which we do) at the end of the year and then we'd have to pay the 24.99% interest rate retroactive to the date of purchase.

They're going to lose on that bet. The money is currently earning interest for us and if they want to give us a free loan so be it. I suppose there are enough suckers out there to make the bet worthwhile or they wouldn't do it.

Just get it in writing when you pay...they'll claim they never got the payment. And if you then cancel the card, get written proof of that too...or a year after that you'll get an annual fee charged. Happened to me, fortunately I had documented everything and they couldn't touch me.

 

[Finance Dave]

It should not be a big deal if she does not carry a balance.

Actually the number of times your credit is checked is one part of your FICO....so it will lower your score somewhat.