Does anyone have any advice for me on how to remedy this issue?

I have a Bank of America Mastercard. We use it for everyday purchases. We carry a low balance on it. I've had the card for over 3 years. The interest rate has been fixed at 7.9%. Today I received a letter in the mail. Starting in May, the interest rate will switch to variable with a 4% margin over the prime rate they choose. The rate will be 13.65% as of now. I've never been late on this card, or anything else on my credit report. The only out of the ordinary activity I have is our recent mortgage refinance. It seems like Bank of America is just raising the rate. I can opt out, and pay off the balance at the 7.9%, and then close the account. I really don't want to shop for a new credit card.

What I'm looking for is this. If I call in to Bank of America to protest this to try to keep my rate fixed a 7.9%, what is the best thing to say? Would filing any complaints such as the BBB do any good?

Say exactly what you just said...

"We use it for everyday purchases. We carry a low balance on it. I've had the card for over 3 years. The interest rate has been fixed at 7.9%.

" I would like to keep my business with your company, can you honor and extend these same terms? "

"If not, I'll pay it off and get another card. "

But, realistically, if you carry a low balance on it, you should just pay it off. Why tack on nearly 8% to everything you buy?

I wouldn't close the account, just pay it off and don't use it. Shopping for a new card takes about a nano second.

Compare here:

Credit Cards - Compare Credit Card Offers at CreditCards.com (http://www.creditcards.com/)

I have to amend the above post.. looks like credit card companies are all pretty much jacking up their rates.. figures. I don't use any revolving credit so I haven't checked the rates in a long time.

We use American Express cards, rack up points and pay off our balance each month. Maybe go that route?

Many cc companies are doing the same thing right now, as well as lowering account balances. It's not a personal thing. It's an across the board thing. I had one cc company RAISE my limit, and a week later, another card decided to lower theirs. Go figure.

This is a fall-out of the banks feeling the economic pinch, so no matter how good your credit is, they're going to punish you, the GOOD consumer.

As others undoubtedly will say, it's probably time to re-evaluate whether you even want to hang onto those cards - although I've read that it is NOT - at this time in the economy - a good time to close the card (creditors will see this as a panic move, and may adjust your score accordingly.)

Exactly, don't close it... and some recommend, keeping a very low balance so They can't close it on you!

Question...

When a bank closes my credit card account base on a credit bureau alerting them that I'm "High Risk", how does that affect my credit score?

Now, as mom as the secondary cardholder, how does it affect her credit score? She's definately not "High Risk" (730+).

I received the same letter yesterday, and googling around led me to this. Ironically, I'm from OKC, so it works out!

I guess I'm not as concerned about the interest rate as I am about it being fixed vs. variable. My interest rate has been fixed since 2004, but now they are making it variable. Are there any cards out there that are keeping fixed interest rates?

Call and state the facts, you've been a long time card holder, you like their program or whatever reason you're using them, but don't like the sudden unexplained rate hike, can that be avoided? IF not I can move my business to _____ that does offer a x% card, no fees, no gimmic rate. The wore they can say is No, and you say close my account.

I looked at my insurance company (usaa.com) and they advertise a 7.95% card w/no fees, not sure the requirements to do business with them, the insurance side of the company req military service, not sure if the banking does or not, I don't use them, I have Midfirst for a bank & southest airlines visa

Simmons First Credit Card - Application (http://www.simmonsfirst.com/creditcards/apply/default.asp?product=123&referral=1116028f2009d2047d07116b316a44)

B of A bought out an account I had with someone else last year, and cut the rate by several percentage points. This week, they put it back up, plus a couple more.

I think it's pretty much pandemic.

They're doing this in advance of some new regulations that take effect next year. Congress passed new laws requiring credit cards to stop all this nonsense of using tricks to extort more money out of customers - things like universal default, double-cycle billing, etc. So now they're simply jacking up the interest rate for no reason at all - because they can - while they still can. The credit crunch is making it that much easier for them because many customers can't simply walk away and transfer their balances to another card, something that would have all too easy to do just a year or so ago when banks were begging for our business.

It also happened to me a few weeks ago. And since I carry a balance on the account (not huge, but not one I can pay off in one month), I had the choice of closing the account at the current rate or allowing them to jack the rate up. I chose to close it and make the few more payments at the lower rate.

While you all are telling Superchris not to close the account, he only has 2 choices. Keep it open at the new rate or close it at the old one.

And complaining about it will get you absolutely nowhere. They really don't care at this point. Sad thing is, they're losing some good customers b/c of their greed. I still think it's BS they can just change your contract any time they want to, from fixed to variable, etc.

Jsibelius, thanks for the info about the new laws. I hadn't heard about the changes, so at least it makes more sense. Instead of the party line "maintaining profitability" which I've heard from numerous places.

The new law has been known for quite some time. The issue with it is that the law is taking way too long to go into effect.

Amen to that, Thunder. Actually, I just read an article in the past couple of days that there may be a third option: you can suspend or freeze your account temporarily - maybe six months or so. That way, you don't damage your credit score by closing an account (thus limiting your available credit), but it still freezes your interest rate where it is long enough to get it paid off - assuming you can pay it off that quickly. I can't remember where I read this, but I know it was either on a news website or on a consumer protection blog. It would take some time to dig it back out because I visit so many, but I wouldn't quote it if it didn't come from a reliable place. In any case, it may not hurt to ask, especially if you've been a good customer and kept your payments up-to-date.

Well, this issue is resolved. Here's what I did. I wrote a letter to my credit cards correspondance address attention to CEO Kenneth Lewis. The letter was addressed to him also. I explained the situation, and my concerns. Over the past few weeks, I've been playing phone tag with a member of Bank of America Executive Relations. We finally reached each other tonight. He stated that the credit card account I had has a new range, and the 7.9% is no longer available. He said that my card would be going up to the 13.65 on 5/16 with a variable rate. He stated that he could offer me a 9.99% fixed rate, and he would "code" my account for future rate increases. Whatever that means. He stated that my other account with BOA would remain unchanged at it's variable rate (currently 5.24%.) I went ahead and accepted the offer. I though that a 2% rate increase would be just fine considering what we use the card for, and the fact that we get cash rewards. Plus the fact that it would remain fixed.

What do you all think? Would you have accepted, or gone further?

In this economy, I think you did okay negotiating your rate.

But, of course, ideally I believe, just don't use credit cards at all!

I so hate credit cards and the problems they cause. It drives me crazy that whenever I buy something at Macys or Dilliards, the sales people are taught to 'sell, sell' sell their credit cards at close to 21% or more usually.. they seem so offended when I say 'no'. Are they crazy??? Why on earth would I do that? An inquiry? Another credit card? To save 10% on this purchase??? ugh. Have they no idea what harm this can do?

American Express, pay it off every month, earn points and pay zero interest

My motto is if you can't afford to pay cash, then don't buy it.


(* I'm not talking to you personally Chris)

In this economy, I think you did okay negotiating your rate.

But, of course, ideally I believe, just don't use credit cards at all!

I so hate credit cards and the problems they cause. It drives me crazy that whenever I buy something at Macys or Dilliards, the sales people are taught to 'sell, sell' sell their credit cards at close to 21% or more usually.. they seem so offended when I say 'no'. Are they crazy??? Why on earth would I do that? An inquiry? Another credit card? To save 10% on this purchase??? ugh. Have they no idea what harm this can do?

American Express, pay it off every month, earn points and pay zero interest

My motto is if you can't afford to pay cash, then don't buy it.


(* I'm not talking to you personally Chris)

I'm getting our credit cards paid off. Bad habit started during college! Sometimes when they ask about a credit card I think (For a $20 shirt?)