Do you think we'll see en masse APR rate jacks or changes in terms, like during CARD Act circa 2008?

[galahad15]

Was just wondering, with the coronavirus pandemic in full force and the stock market plummeting, etc., do you think we'll see en masse APR rate jacks or changes in terms from the credit card issuers, like during what occurred during the CARD Act circa 2008/2009?  Or do you think it may not apply, this time around?  Thanks

[kdm31091]

Rate jacks are somewhat limited these days. I've seen issuers raise APRs, such as Amex, in the past, for people who had very low APRs on cards. They were not jacked to ridicuous rates, but just more in line with the average rewards card rate. Outside of that, I have not seen a lot of lenders raising people's rates outside of prime rate changes, penalty rate, etc.

This crisis is not like 08/09 and is not directly related to banks or finances. It will certainly hurt the banking industry and I think good cards will become tougher to get. But I do not think we will see a ton of arbrirary rate or term changes, outside of perhaps very low APRs being brought up to standard reward card type APR.

[Anonymous]

It seems doubtful to me that it will be totally widespread. Lenders who adopted variable rates also adopted margins they were comfortable with having. With most cards still being in the double digits and plenty still in the 20s, I wouldn't think it would be a big deal. 

There would certainly be some eyebrows raised if banks started adjusting their margins right now to wipe out the cut to the prime rate. 

[K-in-Boston]

Oh, I don't miss those days of rate jacking and balance chasing.  That cost me a LOT of money over the next decade.

Issuers have to notify you at least 45 days in advance, so if you don't agree with the terms, you can always close your card and pay whatever the previous APR was (variable with Prime Rate if not fixed) until any non-promotional balances are paid off.  And there are very limited reasons why an issuer can increase your APR during the first year thanks to the CARD Act (end of promo rate, prime rate change, 60+ days late on the account).

I don't think we'll see rate jacking en masse this time around.

[longtimelurker]

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@K-in-Boston wrote:

Oh, I don't miss those days of rate jacking and balance chasing.  That cost me a LOT of money over the next decade.

Issuers have to notify you at least 45 days in advance, so if you don't agree with the terms, you can always close your card and pay whatever the previous APR was (variable with Prime Rate if not fixed) until any non-promotional balances are paid off.  And there are very limited reasons why an issuer can increase your APR during the first year thanks to the CARD Act (end of promo rate, prime rate change, 60+ days late on the account).

I don't think we'll see rate jacking en masse this time around.

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Right.   And if the issuers get nervous enough, they can always CLD to a tolerable level, or just close.