| Message |
Author |
 Posted: Fri May 25, 2007 8:39 am |
|
|
We have two credit cards that hiked out interest to 30% because of our debt they considered us a risk. We have never been late paying on one and only a few days late on the other at times. Can they do tha? Is it legal? Thank you.
|
|
wfross1115
Joined: 25 May 2007
Posts: 1
Debtcc Points: 46
|
|
|
| Posted: Fri May 25, 2007 10:08 am |
|
|
There is no federal limit on the interest rate a credit card company can charge. Take a look at the return address on your credit card statement. You will notice that most credit card issuers are located in a state such as South Dakota or Delaware where there are no (or weak) "usury laws" (no cap on the interest rate that they charge). There used to be a federal usury law that set a cap on interest but that was changed after the Depression and some states never put a usury law into effect. Hence, Citibank moved to South Dakota so they could operate with no cap on their interest rates.
_________________
Nothing that matters comes easy; nothing that comes easy ever really matters.
|
|
HeretoHelp
Joined: 21 Jan 2007
Posts: 106
Debtcc Points: 2133
|
|
|
| Posted: Fri May 25, 2007 1:45 pm |
|
|
Go through the fine print signed with your creditors. If the charges that they have added is wrong, fill up the dispute form and get it fixed. You are required to pay only those charges agreed by you while signing the contract.
|
|
a_neblat
Joined: 10 Aug 2006
Posts: 408
Debtcc Points: 5814
|
|
|
| Posted: Fri May 25, 2007 5:47 pm |
|
|
Interest rates should all be spelled out in the terms & conditions they mailed when you got the card (problem is, who really keeps those?)
A new kind of rate has made its way into member agreements called the "Default apr". The Default APR is usually around 30%, but I've only seen it kick in if you are actually late with the payments or delinquent on the account. Even then, it usually only last for about 3 billing cycles as long as you make the rest of your payments on time.
I have never seen provisions that allow for the Default APR to kick in simply because they deem you to be a higher risk now than when they gave you the card. If they really deem you to be a high risk, then they should cancel the card...
They must have pulled your credit in order to see how much debt you have. Even if your agreement lets them raise the rate because of your current credit, they would need to comply with reg B if they used your credit as a basis for any adverse action on the account.
Namely, they would need to send you a notice/disclosure stating that they made a decision (or invoked some clause of the member agreement), in part, because of information that they received from an outside credit reporting agency. They would then have to give you the names and address of the NCRAs where they got your credit report, and they would have to give you the whole spiel on how you should contact the credit bureaus if you believe information in your credit file is incorrect...
For the time being, (hopefully you have your member agreement) you should read the terms and find out what exactly invokes the Default APR.
|
|
DebtCruncher
Moderator
Joined: 07 Nov 2006
Posts: 1569
Debtcc Points: 17628
|
|
|
