Tell Them To Take A Hike

A while back, a co-worker confided in me that she was shocked when she opened her monthly credit card statement.  The interest rate on her credit card had jumped to 28%, and she couldn’t understand why.

I asked her if there was any chance that she had recently been late on any of her other payments.  She thought about it for a few minutes, and then said she hadn’t.

The reason I asked her if she had been late on any of her other payments is because of something called universal default.  Universal default is a term used in the credit card industry that can mean big trouble for the consumer who happens to be late with one or more payments.  It doesn’t matter if it is a utility bill, a mortgage payment, or a car payment.  If you are late on a payment, the credit card companies look at you as being at higher risk for default on your obligations, and they can increase your interest rates.

You may wonder how the credit card companies know you are late on one of your other payments.  Well, the fact is, these companies make a habit of reviewing your credit report on a regular basis.

However, my co-worker’s problem wasn’t a result of a late payment.  A few weeks after she told me about the hike in her interest rate, I ran across an article which shed some light on what had happened in her particular situation. The article was entitled, “A Credit Card You Want To Toss”.  The subtitle read, “Bank of America abruptly notified cardholders in good standing their rates would skyrocket if they didn’t opt out fast….”.  The article went on to explain that Bank of America had sent letters telling cardholders that their rates would more than double-to as high as 28%. Some fine print at the end of the letter informed the cardholder that the letter was an amendment to their original credit card agreement, and it gave an 800 number to call.

Sure enough, when I asked my co-worker which company had issued her credit card, she said that it was Bank of America.

Unfortunately, my co-worker didn’t think she had any options, so she kept her Bank of America card with the 28% interest rate. One option would be for her to transfer the balance to a card with a lower interest rate if she couldn’t pay the card off right away.  A better option would be to pay off the card, close the account, and tell the credit card company to take a hike!

Best Wishes for a Debt Free Future,

Debra (www.dropyourdebtfast.com)

Tags: consumer credit, credit card debt, debt, debt counseling, debt elimination, debt relief