Friday, November 14, 2008

What on earth are the credit card companies up to?

I've heard a lot of cautionary advice over the last few weeks about watching the mail for updates to credit card agreements and that the credit card companies were doing a lot of sneaky tricks to attempt to get more money from the consumers, so I was surprised when a letter from my Chase United Airlines credit card came and informed me that my fixed rate would be lowered from %14.99 to %7.99.  Then more surprised when an innocuous "update" to my card holder agreement arrived saying that as of January 2009, the card would switch to a variable rate of up to %29.99 APR.  No indication of what the initial rate would be or of any controls on when or how often the rate would change.  The first letter looked like a regular personal letter, the "update" was a small piece of seeming junk mail. Now, I don't carry a balance on this card, so it doesn't really matter to me, but this really seems like a bait-and-switch type activity. Tell folks loud & clear how low their new fixed APR is, right before the holidays to encourage spending - then slip in a large rate increase in January. It was very clear that the new rate would apply to existing balances.

Isn't this the type of thing that is now known as predatory lending? Of course, neither piece of mail came with a phone number or contact for questions...

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