Last spring, all the major credit card companies sent out significant numbers of opt out notices. And the notices looked an awful lot like junk mail. In fact, a shocking number of people wrote into Smart Balance Transfers to tell us how their interest rates were doubled, tripled, and in some cases, quadrupled. Reports from visitors trickled off during the past few months, and I had hoped the rate increases tied to junk mail looking opt out notices had ended. Unfortunately, it hasn’t.
Jeff T. wrote in to share this unfortunate story:
“Just opened a Capital One statement and was shocked to see that my 4.99% “Fixed for the Life of the Account” rate had skyrocketed to 14.9%! Never late on a payment. I called and was informed that there was a notice of increase mailed in February and that nothing could be done now. I had an balance of about $21,000 on the card. I certainly would have opted out had I received the notice (or noticed the notice, as the case may be). I looked at previous statements and there was no reference to the pending rate increase – seems like a common sense thing to mention on an account statement, yes? So, it appears that over the past 3 months I have paid about a $480 extra in interest before I even figured out what was going on (spouse pays the bills). I will never use a Capital One card again. Moreover, I will actively support regulatory reform – something I never would have been inclined to do.”
Simply put, this is absurd. Jeff’s interest expense increased by close to $2,000 for the first year. And he had no idea. One piece of mail he overlooked could cost him $5000 or more in the next 3 years if he is unable to pay his debt. And the reason he has been put in this situation was a good deal that a bank ultimate chose not to honor, something many others have realized as payment minimums have shot up from 2%-5% on some of these deals, making monthly payments increasefrom reasonable $200 requirements to as much as $700 for some people. (I’ve even heard of a payment ballooning from $350 to $1200-and they say adjustable rate mortgages are bad!)
For those who have solid credit, getting a new balance transfer credit cardis a good option. Although 0% rates don’t last as long as they used to, there are still good short term deals with good, low long term APRs. Unfortunately, none of these long term APRs are 4.99% fixed for life, but many are better than the 15-20% rates consumers are facing.
However, it is always worth a call–or two, or five–to see if you can find someone with a heart at your current credit card company.
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