Rate-jacked ... dumping the banksters!

[Anonymous]

In May, I applied for an auto loan, and had FICO scores at the time in the 790-810 range from all three bureaus. This was a manageable loan, about $13,750 over 4 years at 5.5% ($325/month).

In early July, I sold my house. Mortgage paid off and now renting (about $350/month less than my old mortgage payment). When I moved I bought $4K worth of appliances on a Chase card (against a ~$15K limit). That balance will be paid off as soon as the bill arrives (should be in the next week).

Now in late July, I get notice from Chase that I'm going to be rate-jacked to prime + 12.99%. That would be in the 18-20% range. Though the 27% utilization I incurred through the appliance is higher than ideal, I don't think it should justify this kind of a rate, especially that I've worked hard to maintain ultra-prime credit.

With this rate-jacking incident, and the overall economic malaise caused by the real-estate bubble bursting, I'm ready to tell the 'banksters' in this country to take a hike. So I'm looking for a new credit card, preferably from a credit union.

I generally use a card for convenience and pay in full when the bill arrives. Occasionally, for large purchases, I'll pay down over 2-3 months. If it's something that would take >3 months to pay, I don't put it on a card. So I want something with about a $10K limit, low/no fees, and low interest rates. Rewards / gimmicks are not important to me.

Given that I had a hard inquiry in May for that auto loan, does that rule out PenFed for me? (I've seen other posts saying PenFed is leery of offering cards to anyone who had even as few as 1-2 inquiries.)

Any other alternatives I should be considering?

Next, after I replace that Chase card, I'll be consolidating my retirement plans into an IRA managed by a credit union. Let a more ethical organization skim from my retirement investments.

[FocusOnFICO]

Dunnc-----welcome to the forums!

From what you're describing, it shouldn't preclude you from getting a PenFed card, provided all else is in order.  With scores in your range, you should be in good shape.  PenFed uses their own scoring system that apparently adds 5-10 "points" to your average.

You may also consider a second lower interet card from a cu or similar.  I just joined Addison Avenue and their 5.24% card is attractive.

Also remember, if the Chase card is one or your oldest, you may prefer to sock-drawer is as opposed to closing, depending on you needs for FICO scoring.

[Watchmann]

As long as they don't CLD you, and you PIF, what's the harm?  It has no effect on your financial picture.  Wait them out until the economy turns around.  I wouldn't be cancelling cards and getting another one somewhere else in this environment.  Keep your head down and just PIF.  The less waves you cause, the better.

[Anonymous]

Welcome to the myFICO forums, dunnc71!

I don't personally have any PenFed products, but I think that your overall credit profile will weigh far more heavily than that 1 INQ, regardless of how sensitive they are to them. Another excellent option, if you're eligible to join is NFCU.

I think that it's great that you're looking at credit unions. I think that as the major banks scramble to apply as much adverse action as possible increase their profit margins ahead of the credit card reform changes next July, that credit unions are going to gain a much larger percentage of the market. And, IMO, the laws of supply and demand are going to force the banks to start competing on a more equitable playing field-- not just competing with each other's high lending rates and poor service, but with the much lower rates and better service of the financially solid alternatives.

And, I'd encourage you to send a letter to the executive offices of Chase, and to your State Representatives if you're so inclined. Tell them exactly what you think of this type of RJ. The expectation is that you will just take it quietly, because, afterall, it's legal & they can-- the less negative press and public backlash they get, the better they like it. You can add your voice to the dissent and do business with those lenders that work a little harder at keeping your business.

[Anonymous]

I *usually* pay in full, but occasionally will take ~3 months to pay down if I make a major purchase. So a high interest rate can be harmful in that situation. We're maybe talking 2-3 figure amounts instead of thousands, but still...

My motivation for changing cards is two-fold: A protest against the big banks that have undermined the economic system and imposed onerous credit terms even on good customers, and the knowledge that I can get a better deal with my credit history.

I plan to sock-drawer the Chase card once I have an alternative in place. (I have two cards, which combined offer about 40% of a year's income in credit lines. At some point I should get rid of the Chase card to avoid being rejected for having too much available credit, though I understand the need to limit damage from lowering the average age of accounts.)

Reading some other PenFed threads, it looks difficult to get their cards even with excellent credit. I've had a recent move (due to selling that house) and started a new job about 5 weeks ago (no period of unemployment in between, and can prove income via pay stubs), but think that perhaps with PenFed I should wait six months to avoid being denied. Their ultra-conservative loan officers could perceive a risk because so much changed in the last two months (new address, new car loan, new job). 

My checking / savings accounts are with a credit union. I looked at their site, and their card had a slightly lower interest rate (11.9%) than PenFed (12.5%), though it didn't have cashback or rewards for gas/food purchases. Perhaps this is a more do-able alternative in my current situation?

[score_building]

an excellent low rate cu cc option is Addision Avenue Platinum (as low as 5.25% APR).

pen fed has one of the best rewards card by almost any standard.

[Anonymous]

I will re-iterate on SB's post.

Since the OP has indicated that APR was the issue, I don't think that PenFed is a good fit.  PenFed Platinum CC's are 13.99% and their best rate (Gold Card) is still 12.49%  While these are better rates than current Chase (after hike), they are by no means good rates, unless you have a large balance you want to BT for an extended period and get their 2.99% BT for life of transfer.

As SB said, Addison has rates starting at 5.24%.  NFCU has 7.9%.  Alliant has 8.5%.  PSECU has 9.9%.  I'm there are others out there within these ranges.  And several have little or no BT/Cash fees.

[score_building]

let's remember other tender morsels are available via the pen fed rewards card-like periodic 2.99% APR life time B/T offers. 

clearly a rewards card is not for carrying balances in general but it sounds like the OP has other criteria he's evaluating -low APR at the top of the list, since he asked if there is anything else he could be considering and also stated that he usually PIF. 

never hurts to start with the best and go from there if you can imo.  the pen fed card offers low rates through incomparable life time BT offer and fabulous rewards.  too bad it can feel like you're up against the admittance rate at yale law (c. 9% in some recent years) upon app. *shivers*

txjohn wrote:

I will re-iterate on SB's post.

Since the OP has indicated that APR was the issue, I don't think that PenFed is a good fit.  PenFed Platinum CC's are 13.99% and their best rate (Gold Card) is still 12.49%  While these are better rates than current Chase (after hike), they are by no means good rates, unless you have a large balance you want to BT for an extended period and get their 2.99% BT for life of transfer.

As SB said, Addison has rates starting at 5.24%.  NFCU has 7.9%.  Alliant has 8.5%.  PSECU has 9.9%.  I'm there are others out there within these ranges.  And several have little or no BT/Cash fees.

Message Edited by score_building on 07-27-2009 04:53 PM

[pattycake]

PenFed is a good rewards card with 5% cash back on gas purchases and a great card to use to BT.  Why not try them for BT purposes, and go with Alliant or NFCU for low overall rates for carrying balances?  You may have a chance with PenFed (check out txjohn's thread on this subject), so app with them before you app with another CU so the INQ doesn't show.  

I agree, the banksters are making me mad, too.  I'm keeping my accounts open, but only using them to buy a gallon of milk or other small purchase, then PIF to show activity.   

Univ. Fed CU out of Austin, TX has rates in your FICO range at 6.9%. ufcu.org (they told me 740+)

[Uborrow-Upay]

dunnc71, Alliant has been discussed all over these boards.  It's a painless online membership app, and I'm sure you'll get offered a 10k Visa immediately.  It's not the best rate out there, but no hassles whatsoever.  They didn't even ask income.

For fast and easy, I vote Alliant.

P.S.  "Let a more ethical organization skim from my retirement investments. "  

(Great line!)