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Read Mail from Your Credit Card Companies, or Beware

MailAfter reading this blog post by Fran Gatti – Realtor® Crescent City CA Real Estate, I contacted her for permission to re-post it in its entirety for my Crofton area neighbors.   I can’t think of better timing, as the credit card statements start rolling in with all our holiday shopping charges and we head out for “After Christmas” sales today.  Thanks, Fran.

Read ALL the mail you get from your credit card issuer’s and here’s why. 

With rising defaults on credit card debt, banks and retailers are trying to keep up profits by raising interest rates on their faithful credit card holders that are making their monthly payments on time.

They do this by sending their credit card holder a letter in the mail that is pretty innocuous looking, but read it because it is going to greatly impact your finances.

My son, who has never been late on a payment has received two this week, one from HSBC and one from Citibank. Both stated in itty bitty writing that unless he sends them a letter stating he opts out, the bank or retailer will raise his interest rate to over 20%.  In order to avoid this more than doubling of his interest rate, he has to write a letter, send it by a date less than two weeks away and state that he disagrees with this interest rate increase and that the bank or retailer must close his account and he will continue to pay his card at the previously agreed upon rate.

I received one of these innocent looking letters back in June (so the bank told me). If I got it, I didn’t read it. Learn from my mistake and READ YOUR MAIL.  I had never been late on my credit card payment once since I have had the card (about two years) and always paid above the minimum amount due, however, Advanta ran a credit profile on all their customers and any that fit a certain profile received this letter (or maybe everyone, I’m not sure).

Advanta raised my interest rate from 8.99% to 23%.  Of course I called them flabbergasted and asked what the heck and they said, “We sent you a letter. You had the opportunity to opt-out.”  Well what do you say to that? 

I previously had my finances under control but that really changed things quickly. 

It would change things quickly for my son as well if the bank that financed his motorcycle increased his interest rate from the low two year introductory rate to over 20%, but since I read his mail like any good mom, he’s going to opt out and keep his low interest rate.  Boo hoo to the bank. 

As times get tougher and credit card default rates increase, banks are going to be looking to their steadfast clients to make up those losses.  Losses they created, in many instances, by giving credit increases to customers who they did not document had the ability to repay.

In other words, banks are guilty of helping create the mess, but hey, they are getting bailed out, but you aren’t, so be smart; don’t get caught in this trap.  READ YOUR MAIL.

Again, thank you for this warning and advice, Fran.  Happy New Year!

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