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Know Your Credit Card Rights
When you apply for a credit card, the application that you
sign is also a legally binding contract laying out all the
terms
between you and the bank, such as the interest rate and how
its calculated, the grace period, whether there's an annual fee,
etc.
While you have to agree to the terms and sign if you want the
credit card and while the lender will certainly hold you to the
terms, the lender doesn't feel similarly committed.
Lenders like to constantly amend the terms, effectively
changing the deal after it was made. This is one of the few
industries where you can be charged more than you originally
agreed to pay.
One of the main reasons they're doing this is because they are
constantly checking your credit score, looking for an excuse to
raise rates and thus their income.
So, even if you have never been late on any payment to any
bank or utility, your credit score can raise as you're
approaching your credit limits. Or you could have missed a
payment or lost your job. Lenders have any number of excuses for
their actions.
Also the lenders count on the customers not reading the little
inserts filled with legal jargon they slip in with your bill or
mail separately, at least until it's too late. Apparently the
vast major of card holders never look at these amendments. Theu
also hope that most of us are ignorant of our credit card
rights.
Not all changes to the credit card agreement are necessarily
harmful to you, although you'll rarely find one being done in
your interest. Most of them change minor terms of the
agreement.
But they can contain nasty suprises as well.
The problem the lender has is that the original agreement is a
binding contract that the lender can't change unilaterally. They
have to give you an out. That's why it pays to pay attention and
know your credit card rights.
I once had a credit card account with the stated interest rate
of 13.5%. I was financially strapped and was using more and more
of my available debt. I had never missed a payment or was late to
anybody for at least 10 years.
However, not paying much mind to my statements, I did not know
the bank sent me a notice that it would raise my rate if I used
the card past a certain date. I did and I found myself facing an
interest rate of 24%. Calling the bank and complaining and
threatening to take my business elsewhere had no effect.
After that I started to pay more attention to those little
slips of paper. Twice more different lenders tried to do the same
thing. But I followed the directions on the amendments to the
credit agreement and wrote the bank within the time frame given,
telling them to cancel my account. You must no longer use
the card afterward. If you do, you've accepted the new terms in
spite of your letter and you're stuck with them.
If you have any automatic charges being made to the card,
including things like credit insurance that the lender itself
sells you, make sure they are cancelled in writing before the
cutoff date. One little automatic charge will also constitute an
acceptance of the changes in the credit terms. The bottom line is
that the lender will consider any little slip in its favor and
hit you with the higher rate.
As long as you continue to pay your bill under the terms of
the original agreement, the bank can do nothing about it. You can
pay off the bill at whatever pace you see fit, as long as you
make the minimum payment.
I consider the lenders' actions as akin to kicking you while
you're down. Most people wouldn't be using up their available
credit unless they were already struggling. My credit card
payments went up $46 per month on that card. I saved thousands by
refusing to go along with other proposed increases.
The issuer of one of my cards that has carried a zero balance
for several years has been periodically raising the rate to where
it is about 25%.
Know your credit card rights and fight back. If you've haven't
gone completely over the edge yet, you might find a lender
willing to work with you.
Chris Cooper is a retired attorney who is very familiar with
debt, being in it too many times in his life. These articles pass
on some of the knowledge he has gained striving to become debt
free. He is editor-in-chief of http://www.credit-yourself.com
a website devoted to debt management
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