When a credit card company offers you an interest rate opt out, it is often better to opt out then endure the new rates, especially if you have a large balance. Consumers with smaller balances that can be paid off may benefit from keeping the card open and paying it full each month as a means to keep their credit score from being damaged. However, if you have a substantial balance, by all means opt out of rate increases.
During the past year, I’ve heard from hundreds of consumers who weren’t sure what to do. However, a comment posted today reminded me just how important it is to opt out of rate increases if you carry a balance that you cannot quickly repay. Here is a horror story posted by Gale:
“I have a Bank of America card. I have payed my payments on time and have never gone over my limit. My apr was 7.9% for years. They just recently they decided to raise my apr to 23.9% it has doubled my payments. I have called them to ask that they lower it. They said they could but then I have to stop using it or my new purchases would go to the apr of 23.9% I said well I dont use my card much because the balance is high and I am trying to pay it down. But however I do have my gym membership and my ez-pass coming out of it and I need it for that. So not using is not possible because I need it for automatic payments. I figured well I dont have much new purchases so it wont be that big of a deal. Little did I know that with my next purchase they were not only going to charge my new purchase 23.9% but the whole amount on my card. I called them again and told them that this was not made clear to me by their representative. So I again asked them to please lower my apr. They told me no and there is nothing they can do. I have spent hours on the phone trying to find someone in the company to help me.”
As you can see, Gale got trapped in the opt out fine print. And, unfortunately, her credit card balance was around $12,000. At her new interest rate, she’ll be paying $2868 a year in interest as opposed to $948. And her payments will increase substantially, as her monthly interest bill will exceed $200.
Gale’s story only got worse. She was unable to qualify for a good balance transfer credit card. In fact, the credit card she tried to transfer her balance to gave her a $150 transfer limit! Unfortunately, Gale may be forced to use a credit counseling service or take out a loan to pay back her debt. Its truly a shame that this occurred, and her story will hopefully encourage others to opt out of rate increases without hesitation on cards with substantial balances.