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CCC raising APR on a closed account

Frequent Contributor

CCC raising APR on a closed account

I have an AMEX Delta Sky Miles card that was closed by AMEX back in 12/07, I was paying it off dutifully until Nov/08 in which I missed a payment and they raised the rate from 14.95% to 29.95%... I didn't have the original cardholder agreement, and when I requested a copy of the card holder agreement, they sent me the Agreement for an Optima card -- which I didn't have.


Does anyone know if AMEX is able to change the APR on a closed account? I was under the impression that if you close an account, because of changes in the cardholder agreement, then the current terms apply, not the updated terms?




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Senior Contributor

Re: CCC raising APR on a closed account

every card I can think of has a "default rate" in their terms.....miss a payment and the rate goes up.  Some even have "universal default" meaning they can raise your rate if you are late or default on a card or account issued by any bank or ccc. 

Credit Scoring 101 - Tuscani   *  Guide to Common Abbreviations
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09/03/2009 TU: 777, EQ: 776 ($8 balance on an account dropped me out of 780's)
03/28/2009 TU: 814, EQ: 810, EX: 781 (02/12/2009)
05/18/2005 TU: 563, EQ: 580, EX: 549
Message 2 of 3
Senior Contributor

Re: CCC raising APR on a closed account

You would have to see the credit agreement for your account to see under what circumstances they can move your account to the default rate. In many cases one late payment is all it will take. You need to call and ask them to send you the correct credit agreement for your account - you may have it though. In AMEX-land they may consider all closed accounts with balances to be Optima accounts. (An Optima card is the one they issue folks in the OASIS program - those with old, closed accounts with a balance seeking to be redeemed.) If it is now an Optima account don't fret. It's probably a good thing. When you call you also need to ask what it is you need to do to get moved off the default rate. Sometimes six or twelve consecutive on-time payments will do it.


Universal default is an ugly thing. So ugly in fact that many credit issuers are moving away from the practice voluntarily in order to stay one step ahead of the law. There is a bill pending in the house which would make the practice illegal:


H.R. 1637: Universal Default Prohibition Act of 2009


Universal Default Prohibition Act of 2009 - Amends the Truth in Lending Act to prohibit a creditor from: (1) using any adverse information concerning any consumer, including any in a consumer report or any change in the consumer's credit score, as the basis for increasing any annual percentage rate of interest (APR) for a credit card account of the consumer's under an open end consumer credit plan; or (2) removing or increasing any introductory APR for that account, for reasons other than actions or omissions of the consumer directly related to the account.
Requires such limitation on the use of adverse information to be clearly and conspicuously described to the consumer by the credit card issuer.
Message Edited by creditwherecreditisdue on 04-20-2009 10:58 PM
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