Know Your Credit Card Rights
When you apply for a credit card, the application that you sign is also a legally binding contract laying out all the terms
between you and the bank, such as the interest rate and how its calculated, the grace period, whether there's an annual fee, etc.
While you have to agree to the terms and sign if you want the credit card and while the lender will certainly hold you to the terms, the lender doesn't feel similarly committed.
Lenders like to constantly amend the terms, effectively changing the deal after it was made. This is one of the few industries where you can be charged more than you originally agreed to pay.
One of the main reasons they're doing this is because they are constantly checking your credit score, looking for an excuse to raise rates and thus their income.
So, even if you have never been late on any payment to any bank or utility, your credit score can raise as you're approaching your credit limits. Or you could have missed a payment or lost your job. Lenders have any number of excuses for their actions.
Also the lenders count on the customers not reading the little inserts filled with legal jargon they slip in with your bill or mail separately, at least until it's too late. Apparently the vast major of card holders never look at these amendments. Theu also hope that most of us are ignorant of our credit card rights.
Not all changes to the credit card agreement are necessarily harmful to you, although you'll rarely find one being done in your interest. Most of them change minor terms of the agreement.
But they can contain nasty suprises as well.
The problem the lender has is that the original agreement is a binding contract that the lender can't change unilaterally. They have to give you an out. That's why it pays to pay attention and know your credit card rights.
I once had a credit card account with the stated interest rate of 13.5%. I was financially strapped and was using more and more of my available debt. I had never missed a payment or was late to anybody for at least 10 years.
However, not paying much mind to my statements, I did not know the bank sent me a notice that it would raise my rate if I used the card past a certain date. I did and I found myself facing an interest rate of 24%. Calling the bank and complaining and threatening to take my business elsewhere had no effect.
After that I started to pay more attention to those little slips of paper. Twice more different lenders tried to do the same thing. But I followed the directions on the amendments to the credit agreement and wrote the bank within the time frame given, telling them to cancel my account. You must no longer use the card afterward. If you do, you've accepted the new terms in spite of your letter and you're stuck with them.
If you have any automatic charges being made to the card, including things like credit insurance that the lender itself
sells you, make sure they are cancelled in writing before the cutoff date. One little automatic charge will also constitute an acceptance of the changes in the credit terms. The bottom line is that the lender will consider any little slip in its favor and hit you with the higher rate.
As long as you continue to pay your bill under the terms of the original agreement, the bank can do nothing about it. You can pay off the bill at whatever pace you see fit, as long as you make the minimum payment.
I consider the lenders' actions as akin to kicking you while you're down. Most people wouldn't be using up their available credit unless they were already struggling. My credit card payments went up $46 per month on that card. I saved thousands by refusing to go along with other proposed increases.
The issuer of one of my cards that has carried a zero balance for several years has been periodically raising the rate to where it is about 25%.
Know your credit card rights and fight back. If you've haven't gone completely over the edge yet, you might find a lender willing to work with you.
Chris Cooper is a retired attorney who is very familiar with debt, being in it too many times in his life. These articles pass on some of the knowledge he has gained striving to become debt free. He is editor-in-chief of http://www.credit-yourself.com a website devoted to debt management
MORE RESOURCES:
 AFP | French banks stung by credit-crisis losses MarketWatch - By Simon Kennedy, MarketWatch LONDON (MarketWatch) -- France's third- and fourth-largest banks reported slumping results from the credit crunch on Thursday, ... Credit Crisis Pummels French banks still suffering from credit crisis Natixis Reports Second-Quarter Loss on Writedowns (Update4) |
CreditCards.com: Weekly Credit Card Rate Report MarketWatch - AUSTIN, Texas, Aug 28, 2008 (BUSINESS WIRE) -- Annual percentage rates for new credit card offers dipped lower this week, according to the CreditCards.com ... |
State Employees' Credit Union Extends Long-Term Agreement with Visa MarketWatch - As part of the agreement, SECU, one of the largest credit unions in the United States, will continue to offer its members the full range of Visa consumer ... |
Small Businesses Dissatisfied With Credit Card Processors MarketWatch - CHICAGO, IL, Aug 28, 2008 (MARKET WIRE via COMTEX) -- A new survey shows small businesses are dissatisfied with their credit card processing arrangements. ... |
Sallie Mae says credit facilities have shrunk Reuters - By Dan Wilchins NEW YORK, Aug 28 (Reuters) - Sallie Mae said credit facilities that help fund its loans have shrunk, in a development that could reduce the ... Sallie Mae Lowers Amount for Private Loans, May Face Downgrade |
European Stocks Climb on US Growth; CRH, Credit Agricole Gain Bloomberg - Credit Agricole, France's third-biggest bank, jumped 8.9 percent. The Dow Jones Stoxx 600 Index added 1.4 percent to 287.21, trimming this year's decline to ... European stocks edge higher, helped by Agricole and MBIA European Stocks Climb on US Growth; CRH, Credit Agricole Gain Credit Agricole |
UPDATE 1-Credit Suisse cuts Coca-Cola to neutral Reuters - Credit Suisse analysts also said its economists were expecting a bottoming out and recovery of the dollar for 2009 and beyond, adding that this may have a ... Coca-Cola downgraded to neutral at Credit Suisse Coca-Cola (KO) Lower Following Analyst Downgrade The Last Straw for Coke |
CNG Appeals Order To Issue A Credit To Ratepayers Hartford Courant, United States - By LYNN DOAN | Courant Staff Writer Connecticut Natural Gas is appealing a state decision requiring it to credit customers up to $9.25 on their monthly ... |
Hanmi Financial appoints chief credit officer Bizjournals.com, NC - Hanmi Financial Corp. has appointed John Park executive vice president and chief credit officer, the company said Wednesday. Park was most recently senior ... |
 Reuters | Israel's Koor raises stake in Credit Suisse to 1 pct Reuters - Koor has said it would take advantage of opportunities to buy and sell Credit Suisse shares in accordance with the market situation. ... Nikkei down 0.8 pct, on credit crisis, economic woes ADR Report-Credit, global growth worries weigh down ADRs US STOCKS-Wall St set to open lower on oil, credit worries |
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