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Advice on High Interest Rate on Credit Card - The Bills.com Blog
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Advice on High Interest Rate on Credit Card
Question: Unfortunately, I have gotten myself into a "pickle" with one credit card agency. The Bank is Chase and I've been a member (credit card) since 1991. I have never been late on a payment. About 6 years ago, I paid them off and tried to close the acct. They offered me a 6.9% interest rate "for life". I decided to keep it open. About 2 years ago, I went over my limit by $200, or less (excluding interest rate) and they raised my interest rate to 21%. That was very upsetting. I had never gone over my limit. I asked them to reduce it and they did nothing. After that, they increased my limit a few times. A month ago, I received a notice that they were increasing my interest rate so, I sent a letter stating I wanted to close the account. My payment for January was 2 days late. Now, they are charging me 30% interest rate. What can I do to lower my interest rate with them? This is so unfair! Especially since I've always paid on time and been a good customer? I hate this bank so much. I just want to be done with them forever. I'm at the point now that I "almost" don't care. I've always had good credit but, with the interest rate they're charging me on a 22K balance, I'm doomed. I don't want to ruin my credit rating but, I can't afford to pay them $1000/month with such a high interest rate. Please help.
Answer: Unfortunately, you do not have much recourse against Chase in this situation. A credit card bank has the right to charge you basically whatever interest rate it wishes to charge, especially if you have given it a “reason” to increase your interest rates, such as charging over your credit limit or making a late payment. Even charging only one dollar over your credit limit or missing your payment due date by one day will give your credit card company an excuse to increase your interest rate. The fact of the matter is that many credit card companies are just waiting for consumers to slip up so they can dramatically increase their interest
rates. It is these astronomical interest rates, combined with numerous late payment and over-limit fees, that allow banks to clear such huge profits on their credit card businesses, which are well into the tens of billions of dollars annually, for many of the country’s largest credit card issuers, such as Chase and Citigroup.
The problem for someone in your situation is that the credit contract you signed with Chase allows the bank to increase your interest rate to the “default” rate if you ever charge over your credit limit or miss your payment due date. The fact that the credit contract allows for these huge increases in interest rates, and the fact that the credit card banks make huge profits by taking advantage of the financial misfortune of consumers like you, means that Chase will almost certainly not voluntarily lower your interest rate. The definitive way to prevent Chase from continuing to charge interest at the 30% default rate is to pay off the balance of your account.
If you cannot afford to pay off the balance of the debt, and I assume you cannot given it is a $22,000 account, you may want to consider transferring the balance on this high-interest credit card to lower interest cards. Many credit card companies offer a 0% interest rate on balance transfers, so if your credit is good enough to obtain $22,000 in new credit lines on low interest cards, a balance transfer may help you significantly lower the effective interest rate on your debt. You should also look into taking out a personal loan to pay off this Chase account; the amount of the personal loan you can obtain and the interest rate you will be charged will
largely depend on your credit rating. A good source for personal loans at a competitive interest rate is www.Prosper.com, a peer-to-peer lending network designed to facilitate lending outside of the traditional banking system.
If one of the options I mentioned above does not help you in reducing your interest rate, you may want to consider other options available to consumers struggling with debt, such as debt negotiation services, credit counseling, and possibly even bankruptcy. For more information about the various debt relief options, I encourage you to visit the Bills.com Debt Help page . If you submit your contact information in the Bills.com Savings Center , I can have one of Bills.com’s pre-screened debt relief professionals contact you to discuss the options available to you.
I know how unfair it seems that credit card banks can increase your interest rate by such a large amount for what seems to be a small error on your part. However, as I mentioned, they are allowed to make these changes under that credit contract, and they will almost always take advantage of this ability to increase their profit margins. Hopefully, some of the information I have provided will help you find a way to restructure your debt to avoid paying this astronomical interest rate.
I wish you the best of luck in finding a solution to this problem, and hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
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