oracles wrote:
That means you can do a balance transfer for 1.9% good until 2010 but they can change it a month afterwards with you not doing anything wrong. That is terribly wrong.
The bank would be willing to keep the 1.9% till 2010 terms in force. One would however have to agree to not make any further charges on the card.
The bank would be not allowing any further use of the credit card if the interest rate is to stay the same. It is simply one of the many unintended consequences of the new credit card law.
The government cannot keep the credit card companies from canceling credit cards at any time for any reason. The government cannot force a lender to extend any additional credit.
If a consumer wants to continue to borrow additional funds on a credit card he has to agree to the new terms.
In the past one could pay off the BT at the existing agreed rate even if the interest rate went up on new purchases. He would simply have all payments applied to the lower interest balance first. That was entirely fair even if some people didn't see it that way.
Now that the government is going to force a lender to prorate payments so that the lower interest rate balance will not be repaid as fast, the banks will simply limit future credit to the consumer. That way all of the payments will go to the low interest rate balance.
The banks used to use all payments to reduce low or 0% interest rate balances before reducing subsequent balances with higher interest rates. Since the banks won't be able to do that in the future, they will simply refuse to extend much more credit at a higher interest rate until the balance with the "teaser rate" is paid off in full.
The banks are not going to give low promo rates if they have to cary the balance indefinitely while crediting payments to subsequent revolving balances acquired at higher interest rates.
The old system was fair. It provided low interest rate loans. The new system will simply end the availability of credit to people who want both low rates and a long time to repay the outstanding balance. That means that easy credit for people who have lower credit scores is sadly a thing of the past.
Credit limits are going down, and interest rates are going up. Revolving huge balances at modest interest rates for extended periods of time is over.
Those who pay in full every month won't be affected much. Those who are trying to pay off larger balances will probably see their ability to make additional charges drastically curtailed. The new laws will effectively dry up credit for lower scoring consumers who revolve high balances.
I currently have an $11,000 balance outstanding on a 0% interest loan with Chase. If Chase were to cancel my future charging privileges in return for adhering to a $220 /month minimum payment plan until November, I certainly wouldn't criticism the bank for doing so. I would simply thank the bank for the free money that I was getting.
Along with 0% on the balance until November, the terms include 0% on purchases also. If I simply paid the minimum due and charged a whole lot of purchases Chase would CLD me in a heart beat since the interest rate on purchases can't be changed until November. For that reason I am not even using the card for purchases since I pay in full anyway.
My point is that lowering credit limits and closing accounts are the two main legal recourses the banks have to offset the losses they will incur with the new laws.
The credit game is changing and we will all have to learn how to adapt.
As for the 1.9% until 2010 scenario, I personally would agree to cancel the card, keep the existing 1.9% rate and pay off the whole balance by 2010.
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@score_building wrote:
@Anonymous wrote:
Terms can be changed at anytime.
while it does seem that an issuer can change terms for any reason at any time in many circumstances... with a balance transfer, my understanding is that in the absence of the occurrence a default event listed in the agt. the issuer is somewhat obligated to honor the teaser rate for the specified time period, and in most cases will do so.
This is the case but the lender is not obligated to keep the same credit limit nor is he obligated to even let you charge even one additional penny.
If a person cannot obtain more credit elsewhere he might have to make a choice. Keep a low interest rate by canceling the card or pay higher interest rates on subsequent purchases by keeping the card open.
I suppose we will even see instances of the bank chasing the credit limit down on a low interest rate card while simultaneously offering another additional higher rate card to the consumer for subsequent charges. The banks are already adapting to the new credit laws which will restrict how the banks apply monthly payments.
oracles wrote:
(1) ......however, it was stated they can change the BT rate directly.
(2) ......I just can't see a bank directly saying, I know we told you 0% until 2010 but you know what, sorry we have to change it. It is now 10%. Take it or leave it. I just can't imagine that happening even in today's time.
(3) ......However to change a BT rate directly like that is just crazy, if it is a probability that it can happen.
(1) You requested a more precise explanation of the circumstances of such a blatant disregard for the printed terms of a BT offer.
The rest of the story would be the reason why terms were supposedly changed without cause. Absent the details you requested, I would simply believe the fine print of the BT agreement outlines what the bank may and may not do.
I personally believe that change in rates prohibited by the written terms of the offer would be illegal. One who pays a 3% uncapped BT fee only to have a rate increase a few months later without cause should have grounds for a criminal complaint of fraud.
(2) I agree with you. It is highly unlikely that a bank would "say" that.
. What a bank would say would be more likely:
"The 0% interest rate until 2010 has been terminated for cause as outlined in the Disclosure Statement you received with the original offer."
"The specific reason 0% is no longer available is stated in section X paragraph Z. Thank you for allowing us to service you in this matter."
(3) Saying it happened and explaining how it in fact actually did happen are two different dissertations. The Devil is always in the details.
We will be better able to understand what happened if / when the details get posted.
@score_building wrote:
@Anonymous wrote:
Terms can be chaged at anytime.while it does seem that an issuer can change terms for any reason at any time in many circumstances... with a balance transfer, my understanding is that in the absence of the occurrence a default event listed in the agt. the issuer is somewhat obligated to honor the teaser rate for the specified time period, and in most cases will do so.
You are correct.
The issuer is however not "somewhat" obligated but absolutely obligated.
jamaraz1 wrote:
they just sent me an offer online for a new 0% balance transfer offer. You had to log in to find out the details (I didn't bother) but I thought it was pretty funny anyway.Why don't you check it out. Chase allows you to deposit your welcome package BT check into your checking account. You can then pay down any account balances that you want.
You could even use existing "other funds" in your checking account to pay down the balance on your existing Chase card. (rolls eyes & shrugs shoulders).
