Opting out of credit card interest increase

[Scamp]

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Georgia wrote:

Yes, I'm aware of the debt-to-available credit disadvantage. So,would keeping a small balance on the card be smart in order to keep that CL as part of my overall available? Perhaps at some point, my interest would be reduced (to what it was originally)...what do you think? Thanks!

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Sorry it took me so long to respond, Georgia; I had to try to pick some brains more familiar than mine with the ins and outs of opt-out and scoring.

From what I've been able to gather, if you opt out of this RJ, the CL on this card will still be factored into your overall util while you're paying down the balance, even if the account is marked 'closed' on your reports..  Once the balance reaches 0, the CL will no longer be factored in.

If it's not marked 'closed', and if you're lucky enough not to have them close it once the balance reaches 0, then I would think the CL would still be factored into util even after you've paid it off.

I'm not sure if the lender can chase your balance during an opt-out pay-down; you might try asking them about this, though I don't know if a CSR could give you the answer.  I'd also try again to clarify how this cc would be reported if you opt out, and whether or not you're facing closure of the account once it's paid off.

Also, be aware that there've been a few horror stories told of lenders marking opted-out accounts as charge-offs and sending them to collections - only a few, but they're apparently out there.

In your shoes, I might try getting hold of another cc to replace this tradeline, and if successful, go ahead and opt out, PIF ASAP, and not sweat it anymore.  Even if you don't think you should try for new credit right now, I'd still recommend paying this account down ASAP and, if they don't chase your balance, perhaps trying to replace this cc with another one once your util's been reduced, so that when you pay it off completely, the loss of this CL in your score won't hurt so much.

Hope this helps.

[Anonymous]

Ok, thank you for your response. Yesterday, I called BofA and I asked them for a reason behind the interest hike, if they'd close the account once it's paid up, if my credit limits were still stable... what I got was a big surprise! Not only did my interest stay at 25% on this card, all 3 of my credit limits have been decreased. So, now I am maxed on all 3 accounts. What a mess! I am fit to be tied. I've contacted BofA several times since and they aren't budging. They have a pretty lame excuse to my questioning their tactics (I called just for an explanation and got myself into a credit mess). I was so mad that I asked them if my inquiry call prompted the decreased credit limits (I was not rude, I am a professional...) and naturally they said no and responded that I would('ve) received a phone call or a letter stating their decision. However, my mother who also has a BofA card looked back at her recent statement and noticed that her limit had also been cut in l/2 without any notification from them. I really don't know what to do now...I'm wondering if my mortgage will be affected. Isn't my payment based on my credit score?

[Scamp]

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Georgia wrote:

Ok, thank you for your response. Yesterday, I called BofA and I asked them for a reason behind the interest hike, if they'd close the account once it's paid up, if my credit limits were still stable... what I got was a big surprise! Not only did my interest stay at 25% on this card, all 3 of my credit limits have been decreased. So, now I am maxed on all 3 accounts. What a mess! I am fit to be tied. I've contacted BofA several times since and they aren't budging. They have a pretty lame excuse to my questioning their tactics (I called just for an explanation and got myself into a credit mess). I was so mad that I asked them if my inquiry call prompted the decreased credit limits (I was not rude, I am a professional...) and naturally they said no and responded that I would('ve) received a phone call or a letter stating their decision. However, my mother who also has a BofA card looked back at her recent statement and noticed that her limit had also been cut in l/2 without any notification from them. I really don't know what to do now...I'm wondering if my mortgage will be affected. Isn't my payment based on my credit score?

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Ouch!  Sorry to hear it!

If you haven't already, you might read txjohn's post about  his brother's success in calling one of the BofA backdoor numbers (see my sig line for the link, or else find it stickied at the top of this board) and getting his slashed CL restored: BofA CL restored

Trying the backdoor numbers and talking to their credit analysts CAN sometimes get positive results. Haulingthescoreup also had success in getting one of her cut CL's restored.

Do give it a shot. 

On your question about your mortgage being affected, you might try posting over in the Mortgage Loans board about that - they should be able to give you some idea.

Good luck, and keep us posted.

(edited to add link)

Message Edited by Scamp on 05-01-2009 06:21 AM

[karbon86]

I had the same thing happen.  This AAA card was my first card I got when I was 18 and a sophmore in college.  It was originally with MBNA and they were bought out by BofA.  Recently I got the same letter stating the rate increases.  I have had no activity on this card for about 6-8 months. Always paid in full and never carried a balance.  They increased my rate from 9.9% to 16% for no reason.  I'm not too worried since I don't use it.  They also rate jacked my other BofA card from 12% to 29%.  Same situation where I don't really use it but I keep it open since there are no fees and adds to my available credit.  Both cards add 17K to my avail credit.  I exculsively use my PenFed cashback card now and my Amex blue cash as a backup if I lose my card etc.

My FICO average is ~750 and they have only been going up so it's not like anything I did to provoke this.  They just want to get the rate jacks in before it becomes illegal.

Message Edited by karbon86 on 05-01-2009 07:38 AM

[Anonymous]

Good for you. You're in a better position than I (not having a balance). I've been telling my husband for awhile now that we need to concentrate on getting my balances paid off. It's come back to bite me now (I believe it's because of the recession etc). I was told by BofA that they won't hike my rate since they lowered my limits. But, I'm not too comfortable believing in them right now. My util with these three cards went from $40,000 to $19,000 in one afternoon. Ugly. Thanks for your words.

[Anonymous]

I find it insane that ALL the banks and cards are 1st reducing the limits to the current balance (thereby making the cards all "maxed out") then forcing the consumer to EITHER opt-out (Then closing the account and hurting your credit considerably worse) OR pay down the balance at 29.99%, which is complete ROBBERY.

Why is it, that my score is now going to fall from 750 to below 700, simply because I don't want to digest 29.99% theft of my income?? Why are so many FICO threads all calm and OK with this, (MANY posts I have read are saying, oh - just pay them down faster...)  Hmm - That does NOT make this Ok or "right".  Many folks have (had) Excellent credit.  This automatically slashes scores and forces folks into appearing as though they have not managed their credit appropriately - or worse, ran up all their cards then closed the accounts like a deadbeat.

I do not understand why so many posts on the FICO site, seem to think this is Ok.  It's not - this is thievery - I am aware of the new banking legislation that caused all this - and that does not make this fair, appropriate nor an ethical business practice against the very tax payers that funded these very same bank bail-outs.  There is something seriously wrong that people are not writing their repsresentatives in Washington and that NOBODY is protecting the consumers at a time like this.  I have never seen so many scores negatively affected by actions they had nothing to do with.

For those that post comments about how they maintain no more than 10% utilization on their cards, and simply paid the full balance - I applaud you. But, many, many other folks do not have that superior cash flow.

[haulingthescoreup]

I don't think that most of us think that this is OK, by any means. But we are here to try to help people with their credit over the long run.

It might not be the wisest move for one's long-term credit picture to close out an account, if there is any way at all to pay off the balance quickly enough to dodge the worst of the rate-jack impact.

When someone finds out that they've been rate-jacked, they're often angry, and feeling betrayed, and most importantly, scared. Making decisions under the influence of these emotions can lead to long-term regrets. i think that many of the posts that you've read are an attempt to help the OP back up a step or two, evaluate the situation, figure out the costs involved, and make the best decision for that particular person, in that particular situation.

I certainly wouldn't assume that we're nonchalant about this sort of activity, because 99% of us are not.

[MarineVietVet]

I don't think that most of us think that this is OK, by any means. But we are here to try to help people with their credit over the long run.

+1

Most if not all of us here have had or are still experiencing financial difficulties. As I say in my signature I'm a recovering crediholic. We concentrate more on what to do about a situation instead if wondering so much why it happened. In no way does that mean we are not upset and concerned about what companies are doing to/with the credit market. Our (my) priorities lean a different way.