Life under the new credit card rules.

[Hell Hath No Fury]

I just got a call from my Mom.

She has held a Chevron gas card since 1961. She has had a very good record with them, never ran a high balance and always paid her bill on time.

She just got a notice from Chevron she had skipped a payment. (She had two surgeries back to back and her bill was went MIA when she was moving between households post-surgery.) The notice told her not only had she missed her payment, but that now meant she had a new interest rate for future purchases on the card. That new rate was 77%.

Yes, you read that right, 77% on any new charges to her Chevron card.

Thank the gods she is in a position to tell them to stuff their card, but it is insane that the company cold get away with that kind of shit. They will soon rank right up there with the PayDay loan sharks. :mad:

[virgogal]

1. Words fail me.

[Hell Hath No Fury]

9. I asked her to repeat it --

because I thought I had heard wrong. :crazy:

[jmowreader]

2. Soon?

Remember http://www.huffingtonpost.com/2009/12/17/799-percent-interest-cred_n_396191.html? The 79.9 percent credit card from First Premier?

These cards DO have a benefit in that they may cause the downfall of the Mafia. If "aboveboard" lenders can charge 80 percent interest, it takes all the fun out of organized crime.

[Hell Hath No Fury]

10. That was my thought as well.

Who in their rigth mind would stick with a card at that rate?? Perhaps they are trying to push her out as a credit client because she never carries a high monthly balance and is not generating enough cach for them. :shrug:

[Dr Morbius]

39. It's still organized crime.

It's called a bank, but it's organized crime.

[jmowreader]

43. You know the difference between a banker and a mobster, correct?

Mobsters don't contribute to Republicans.

[bullimiami]

3. in any decent society that would be criminal.

[Hell Hath No Fury]

11. Well, as we have all learned --

lately this ain't Sweden. :( Sadly.

[SOS]

4. The mafia used to charge less

And you can be sure the "financial reform" bill in the Senate won't do a damn thing about it.

[Hell Hath No Fury]

12. Nothin' but high end loan sharks.

That is exactly what I think of this whole mess. And any bill that could be passed will not be worth the paper it is printed on -- the the GOPers and the DLC will make sure of that.

[beyurslf]

5. I have a card that has a pretty high balance that I have been working on paying off.

They called me up and offered me this special program where I would have 0 interest and no penalties for being over the limit (which I was then). I had to agree to a set payment that would be auto-drafted. It would last 90 days and then I could opt in for another 12 months after that. I thought it sounded great so I agreed.
Then, a few weeks later, I get the agreement in the mail. It says that in order to opt in for the additional 12 months, I had to have paid my balance in full, which was not possible in 3 months' time. It wasn't even close to the agreed upon amount that they were drafting. Additionally, it said if I did not complete the program (defined as paying my balance in full), that my card would revert to the original fees and would have a 99.9% interest rate.
YES 99.9% INTEREST RATE!!!!

I called them up and asked about it. The first person said the letter was supposed to say "up to" 99.9 but it would only revert to the rate I had before (9.9%). A supervisor got on the phone and said the letter was a typo and it should say 9.9% interest. i asked them to send me something in writing that says this. They refused. They said they could not even regenerate the letter without the typo. I told them to take me out the program and that I will be watching for my next statement to see what the interest is. I should get it this week sometime.

[Hell Hath No Fury]

13. Wow!

:wow: That is freakin' insane! I got an offer that sounds suspiciously like what you are talking about -- I will make sure to go over it with a fine tooth comb before agreeing to it.

Unbelievable. I hope you get yourself out from under that crap debt and tell them to take a hike when you do. :mad:

[virgogal]

31. Keep us informed on this one. Unbelievable,especially that they

can't send another letter with the correct information.

Liars !

[Kali]

6. wow

that makes the crap Skank of America is trying to pull on me look positively friendly and benign!
What was the rate before?

[Hell Hath No Fury]

15. I think it was 11%.

She has been a good client of theirs and this is how they say "thank-you-very-much." :(

[lumpy]

7. Gave up credit cards 50 years ago. Paying with cash is easy,

credit costs more.

[ecstatic]

8. Do you think that was a typo? And if not, which new credit card rule

allowed for a rate increase like that?

[Hell Hath No Fury]

16. Not a typo --

the first thing she did was make a call to find out if she was seeing things.

That's the problem -- there doesn't appear to be any new rules that stops them from this type of increase. This is reform?!?!?!

[Statistical]

23. That is the massive (you can drive a truck through it ) loophole in CC regulation.

The CC reform bill actually did do some good.
It prevents new rates from being retroactive.
It prevents changing rates without reason (sadly missing payment is reason).
It prevents two cycle billing
It prevents not accepting payment received on due date before 5pm (no more payments after 11am are considered received next day)
It prevents sending out bill right before payment is due
It prevents making grace period less than 24 days
etc
etc

However the giant loophole is there is absolutely no usury limit on federally charted banks.
77% = legal
177% = legal
177777777% = legal
a trillion % interest = legal

So the govt tweaked the rules (and honestly the changes are very good) but without a usury cap banks can charge whatever interest they want.

Hell even a crappy ususry cap (like 24%) would be better than the sky is the limit that we have now.

[jmowreader]

44. The most beneficial financial reform Obama could do...

would be to set a national usury rate of 18 percent and a national default rate of 27 percent.

"But some credit customers are too risky to lend to at 18 percent!" will scream the banks. Then, why are you lending money to them in the first place? There is absolutely NO reason why someone who's too big of a credit risk to deal with at less than 77 percent needs to be walking around with an unsecured credit card. Those people are why God invented secured credit cards.

[Statistical]

19. The new rules allow it.

CC can raise rates for specific reasons (and missing payments is one). There is no limit on interest rate they can charge.

If they wanted to they could charged 8,760% annual interest rate on new purchases.

There is no federal usary limit. Prior to 1980 banks were limited by the usury limit in the state they incorporated.

The Depository Institutions Deregulation and Monetary Control Act of 1980 removed state limits from federal banks.
State limits do not apply and there is no federal limit.

http://en.wikipedia.org/wiki/Depository_Institutions_Deregulation_and_Monetary_Control_Act

So if a bank wanted to they could offer a card with 8,760% annual interest rate. Why 8,760%? Why what would be a "fair" 1% interest per hour.

The only thing CC bill did that helps in this instance is
a) banks need reason for raising rates
b) rates apply to new purchases

[ecstatic]

20. Are the companies prevented from closing accounts?

A 77% rate seems like the action of a company that doesn't want your business anymore.

[Statistical]

21. No they can't prevent you from closing account.

They also can't retroactive apply new rate to old charges.
They can't raise rates without a "reason" (such as missing payment).
Lastly they must provide a payment plan to pay off old balances if user wishes to close account with existing balance.

So CC reform bill does help "some" in limiting the damage of rate hikes however the Elephant in the room is that the CC reform bill changes lots of rules but still allows UNLIMITED interest rates.

100%, 200%, 5000%, 8760% (1% per hour), 525,600% (1% per minute), 31,536,000% (1% per second) are all legal under federal law (no usury limit) and state law (state laws do not apply to Federally Chartered banks).

http://en.wikipedia.org/wiki/Depository_Institutions_Deregulation_and_Monetary_Control_Act

[Hell Hath No Fury]

33. From everything I read --

closing an account is a no-no that shows up on your credit report. :shrug: So you're kind of damned if you keep the card, damned if you don't. I think my Mom is going to keep the account open and just not use the card ever again -- if they start charging her a yearly fee, then she will flat out close it and take the credit history hit.

[Vinca]

14. If that's not usury, I don't know what is.

[Hell Hath No Fury]

18. I think that would qualify!

Flippin' insane, is what it is. :crazy:

[BlueIris]

17. Yikers. nt

[marybourg]

22. But the new rules prevent the credit card company from making the

new interest rate retroactive, which is what they were doing before these new rules. So all the card holder has to do to avoid the 77% interest rate (or whatever it is) is not to use that particular card again and proceed to pay off the old balance at the old rate. Big improvement in my mind (unless one is looking to blame the Obama administration for something? Anything?? Could that be happenning on this board?) :puke:

[Hell Hath No Fury]

34. Frm what the Chevron letter says --

you have to make six consecutive payments on time or the new rate applies to the old balance, too (see my post below).

[HughMoran]

24. I'd pass a law giving the death penalty to any credit card company that did this

:mad:

[phantom power]

25. 77%. That's a rate that might make a mobster think "goddamn, that's just unprofessional"

:wow:

[CrispyQ]

27. ~lol

:rofl:

[lbrtbell]

26. I have NO credit cards

I got out of that racket years ago. They really are loan sharks, and it's getting worse instead of better.

[CrispyQ]

28. This is a good story for a LTTE.

And name names.

[Hell Hath No Fury]

35. Oh, you bet I am working on one --

but I am including copies to the WH and my Congresscritters as well. :mad:

[la_chupa]

29. wow this makes Chase sound friendly

Back before the new laws took effect I had a card with a small balance on it. They claimed that I had missed two payments within some magical period of time. I didn't think I had but I did make one a whole day late when I was on vacation. They were going to jack my rate up to something that actually made me laugh. What was odd was that when I called to cancel it the woman on the phone tried to talk me into keeping it. She was in the midst of telling me how much they appreciated my business when I cut her off and explained to her that despite what she was being told by the company this was a ploy specifically to convince me to close my account.

Then a couple of weeks after I canceled it I got a letter saying that there had been a mistake on my account and my interest rate would not be going up.

don't care

I'm on a tear to pay off everything I can and live a cash based life. Tough though, I'm still saddled with student loans and all.

[Hell Hath No Fury]

36. I have several cards I am looking --

to get out from under, as well. It's time to starve the Beast. Good luck with mmoving off the Credit Grid! :hi:

[Juneboarder]

30. I'm sorry to be the devil's advocate here, but...

77% interest rate is hard to believe. I have not heard of this in my day to day business dealings; nor do I know of anyone this has happened to personally. Do you have any links to prove these astronomical rates? I even tried to google the issue and came up with nothing other than rates around 25-40% on a default balance.

[Hell Hath No Fury]

32. I can't provide a link --

Mom did send me a copy of the letter via fax. It is as follows:

"Notice of Changes to Your Interest Rate.

You have triggered the Penalty APR. This change will impact your account as follows:

Transactions after 04/02/10: As of 5/18/10, the Penalty APR will apply to these transcations.

Transactions made on or before 04/02/10: Current rates will continue to apply to these transactions. However, if you become more than 60 days late on your account, the Penalty APR will apply to those transactiosn as well."

Annual Percentage Rate purchase 77.43%
Annual Pertentage Rate cash advance 29.99% "

[Juneboarder]

42. What bank is this coming from? n/t

[Hell Hath No Fury]

46. It's Chevron/Texaco card --

not a bank card.

[Juneboarder]

47. GE Money Bank

"The Chevron and Texaco Visa Card and personal credit card is issued by GE Money Bank and is not an obligation of Chevron U.S.A. Inc" (http://www.chevrontexacocards.com/)

Here are the terms of the agreement on the Chevron and Texaco Visa: https://www.gemoneyterms.com/pdf/ChevronVisaCard.pdf

You can find the terms of agreements on other GEMB products at: https://www.gemoneyterms.com/

I don't really think that 77% interest is correct; if that is what your statement says then I would fight it. They must disclose this on their terms of agreement to be able to charge it.

Best of luck that you have a positive outcome here!! :)

[Hell Hath No Fury]

48. Thanks!

Will certainly check all that out. :hi:

[Juneboarder]

49. You are VERY welcome :) n/t

[csziggy]

40. It is not just gas cards - other cards arfe jacking interest up to 79.9%

First Premier Bank Charges 80% Credit Card Interest - http://www.allgov.com/ViewNews/First_Premier_Bank_Charges_80_Percent_Credit_Card_Interest_91220

[Juneboarder]

41. Thank you for the link

It's great to see what's really out there other than he said she said stuff...

This link does show the start of a scary trend. The positive news is that it does specify they are a sub-prime bank; whether the main stream banks follow suit is a question only time can tell. Since being in collections, I learned to NEVER deal with a sub-prime lender unless absolutely necessary.

[Lone_Star_Dem]

37. What state is she in?

I seriously doubt that's legal.

[Hell Hath No Fury]

38. California --

I am going to do some further checking into the legality of this.

[jmowreader]

45. It doesn't matter what state she's in

The federal government allows "national banks" (all credit cards are issued by such) to set credit card rates based on the usury rate of the state the bank's chartered in rather than the cardholder's state of residence. This is why the entire credit card industry is headquartered in either Delaware or (usually) South Dakota--neither of those states have usury rates. South Dakota did a lot of other manipulations to draw the CC industry there when they really needed an influx of new business capital and employment, so now your credit card almost certainly comes from South Dakota.