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Boid Fink

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: March 10, 2009, 02:16:34 AM

Forget American Express. They are actually PAYING people right now to close accounts.

Discover isnt too bad but you have to have perfect credit to get approved.
I seldom use the Discover card.  But I laugh at the Family Guy episode all the time...


joedav01

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#1 : March 07, 2009, 04:22:51 PM

Card companies do this when they want you to close your account, because they feel you are on the verge of becoming a major credit risk and they want to get you off their books ahead of the curve.  I actually used to work at Capital One for almost a decade.  They pull your credit report periodically to monitor your overall situation.  If your overall debt levels continually increase, or if you only make minimum or close to minimum payments on your accounts and are close to the limits, if you miss a payment on anything on your report, etc... they will reprice you (that is the internal lingo for what they are doing).  Like you said though, you have the option of not using the card anymore and paying back the debt under your original terms.  Its not just Capital One that does this, its all banks.  And right now, risk tolerance is at an all time low for obvious reasons.

Put yourself in their shoes.  Lets say you lend someone $10K and then you realize their ability to pay you back is shrinking by the day...wouldn't you do whatever you could to protect yourself?  People always get mad at banks and corporations that they owe money to for these types of things, but they never think about what they would do if the roles were reversed. 


Imagine if the person didn't pay you back at all and filed bankruptcy protection?  That is basically legalized bank robbery.  Instead of walking into a bank with a gun and demanding money, they just apply for a loan and then don't pay it back.  And then they go to court and file bankruptcy protection so the bank has no right to try to recoup their loss.  I don't know about you, but if I lent someone money and they pulled that @%#$ I would pay them a visit in the middle of the night.  All the banks are allowed to do is put a dent on your credit report.

The simple solution is that if you don't like the conditions the bank(s) have on the money you owe them, then don't borrow their money. Its that simple.


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#2 : March 07, 2009, 04:14:43 PM

I've had a Capital One visa card for over 10 years, and I've never missed a payment. Yet I got a letter recently saying that next month my APR will be increased to 29%!! >:(  Apparently many other Capital One cardholders are getting similar letters, for no reason. I guess the government bailouts weren't good enough for Capital One... They gave me the option to close my account and keep my current rate... which do I really have a choice?  My only concern is, doesn't closing a credit  account adversely affect your credit rating? But I guess it's better than paying 29% interest...  Damn crooks, I can't wait for the day when I'm debt free...

John Galt?

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#3 : March 07, 2009, 04:29:36 PM

Had Cap One and Citibank do the same thing to me recently. Closed both accounts. Both were business accounts which I used to buy materials and supplies and have never missed a payment or let a balance run more than 3 months w/o paying the whole thing off.

Merchant Lynx (my business CC processor for customer purchases) sent me a letter saying they were raising my discount rate to 6% on all CC transactions!!!

Yes, they will be losing my business. In a small business credit cards are a convenience and may help sales, but if I'm losing 6% of everything I sell via CCs, I'll either find another processor or not take credit cards. I already don't take Amex or Discover for this reason.


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#4 : March 07, 2009, 04:32:06 PM

6% for Visa and MC transactions? Wow.  My how times have changed.  You are right that is similar to Discover and Amex rates. 


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#5 : March 07, 2009, 04:57:24 PM

Don't close it, just don't use it.

Closing the card could hurt your credit rating because it is based entirely on your loan/credit limit ratio. What I mean by that is lets say your credit limit is 30k, and your usually carry a balance of 1k. Good ratio. If you usually carry 20k, bad ratio. If you (currently) have 5k of balance with a limit of 15k, and this cc is 5k of that limit, closing the account causes your ration to all of a sudden suck very badly. I believe the threshold for when it starts to have an adverse effect on your rating is if you continuously carry a balance > 30% of your limit. In the above example you go form 30% (ish) to 50%. That is how it effects your credit rating. Plus you take a bit of a hit by closing it which I believe does not last for much more than 6 months to a year. If you have no intention of borrowing money in that time it shouldn't be a problem (from that perspective) but again, from everything I have learned it is all about the debt to limit ratio.

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#6 : March 07, 2009, 05:11:11 PM

Card companies do this when they want you to close your account, because they feel you are on the verge of becoming a major credit risk and they want to get you off their books ahead of the curve.  I actually used to work at Capital One for almost a decade.  They pull your credit report periodically to monitor your overall situation.  If your overall debt levels continually increase, or if you only make minimum or close to minimum payments on your accounts and are close to the limits, if you miss a payment on anything on your report, etc... they will reprice you (that is the internal lingo for what they are doing).  Like you said though, you have the option of not using the card anymore and paying back the debt under your original terms.  Its not just Capital One that does this, its all banks.  And right now, risk tolerance is at an all time low for obvious reasons.

Put yourself in their shoes.  Lets say you lend someone $10K and then you realize their ability to pay you back is shrinking by the day...wouldn't you do whatever you could to protect yourself?  People always get mad at banks and corporations that they owe money to for these types of things, but they never think about what they would do if the roles were reversed. 


Imagine if the person didn't pay you back at all and filed bankruptcy protection?  That is basically legalized bank robbery.  Instead of walking into a bank with a gun and demanding money, they just apply for a loan and then don't pay it back.  And then they go to court and file bankruptcy protection so the bank has no right to try to recoup their loss.  I don't know about you, but if I lent someone money and they pulled that @%#$ I would pay them a visit in the middle of the night.  All the banks are allowed to do is put a dent on your credit report.

The simple solution is that if you don't like the conditions the bank(s) have on the money you owe them, then don't borrow their money. Its that simple.


thanks good info...

The past year I have been paying a bit over the minimum each month, because my income decreased when I had to take a new job. So, it's been taking me awhile to pay it down. Perhaps as you stated, that could explain their actions.   Not to mention I haven't used the card in probably 6-8 months.

joedav01

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#7 : March 07, 2009, 05:22:45 PM

Yep. That's probably it then.  This economy sucks man.  You aren't alone with the decreasing income.  Knock on wood, I am personally in a good situation at work, but my wife recently was laid off and we went from a 2 income family to a one income family.  We can get by, but our disposable income has been greatly reduced. 


SON-OF-ZELL

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#8 : March 07, 2009, 08:44:43 PM

THe only answer is to call them up and tell them, if they raise the rate to that Usurious level they can kiss your a$$ and you will never pay them a dime on any of it, and see what they say.  At this point what does it matter what your credit score is......they are giving it to the people  who are trustworthy and on time with payments because they can, and our  wonderful Fed GOV let's them.   Our Government just sucks...... .


joedav01

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#9 : March 07, 2009, 09:58:33 PM

THe only answer is to call them up and tell them, if they raise the rate to that Usurious level they can kiss your a$$ and you will never pay them a dime on any of it, and see what they say.  At this point what does it matter what your credit score is......they are giving it to the people  who are trustworthy and on time with payments because they can, and our  wonderful Fed GOV let's them.   Our Government just sucks...... .

Ummm. Do you think the person who answers the phone (probably someone in India using an American alias) will care in the least or even if they did have any authority to do anything?  They aren't even Capital One employees, they are employed by an outsourcing firm.   ::)


Boid Fink

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#10 : March 07, 2009, 10:11:02 PM

I have to take a peek at my APR now...makes me sick to think they can do that with such ease...

Almost criminal man.


LFO

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#11 : March 07, 2009, 10:24:44 PM

I had a card that was like clockwork, always due on the 6th-8th of each month every month for about 5 years.  I would generally go online and schedule a payment around the 3rd.  Well this past month luckily I logged on the site the 1st to search for an old transaction.  To my surprise it said my bill was due the 2nd!  I don't even use this card that much (often less than $50 a month) so had I not gotten on to search the transaction, I would have been nailed with a $30 late fee for a bill that was less than that.  I think they were trying to get me with a late fee to make some money, since they probably realized I pay the same day each month.  I find it hard to believe it is a coincidence that my bill is due about the same time every month for years, then all of a sudden one month jumps that far. 

cyberdude557

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#12 : March 07, 2009, 10:31:50 PM

Another thing all credit cards are doing is lowering your credit limit without telling you. So you better keep an eye on your limit because if they lower it and go over, you get slapped with a fee.

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#13 : March 08, 2009, 12:34:09 AM

Yeah. Frickin BoA did the same to me. 7.9% APR 4 years, no missed payments, BAM! 28%. Sons of B's.

oregonbucfan

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#14 : March 08, 2009, 12:35:50 AM

Chase did that with mine. So I paid it off and cut it up. But kept the account open. Dont close it if you do the same, it hurts your credit.

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