Recently, more and more friends, family members and co-workers have been turning to me with their financial questions. Sometimes it’s just a simple query that I can answer with a fact; other times, it’s straight-out financial advice they’re seeking. While I’m honored, it’s not like I’m a financial professional — or a millionaire. In fact, there are plenty of other people other there whose bank accounts have more zeroes in them than mine does. Mr. Saver and I don’t make a ton of money; rather, we just manage our finances best we can and, more importantly, try to live BELOW our means.
While I’m not comfortable with offering advice about investments, I wholeheartedly love to answer general questions, especially anything that will help them save money.
Opting Out of a Credit Card Rate Increase
Yesterday’s question was about opting out of the interest rate increase on a credit card. A credit card issuer sent notification of an interest rate increase. This person didn’t want to accept the increase and called to opt out, or reject, the new terms. Fully expecting the customer service rep to tell him that the account would then be closed, he was surprised when the CSR told him the credit card account would stay open, no matter how he phrased the question. He thought it was strange and is wary of the claim.
I don’t blame him. Credit card companies have their backs against the wall since the provisions of the new Credit CARD Act went into effect. They’ll do anything they can to find a loophole that will maintain or increase their revenues.
He said he would call the credit card company again to ask a different customer service rep the same questions. I thought that was an excellent idea, and also advised him to keep an eye out for any shady doings, such as closure of the account at a later date. I would also not put it past a credit card issuer to find a way to increase the interest rate anyway.
It wouldn’t be the end of the world if the credit card account was closed, but it could have a negative impact on your credit score, particularly if you have a lot of consumer debt. Losing just a few thousand dollars of your credit line changes the debt-to-credit ratio, making you less attractive to lenders. And other credit card companies could raise the interest rates on your other accounts. It’s a vicious circle.
The other thing I’ve come across in my research is that the rejection of new terms/interest rates must be done IN WRITING within 45 days of notification. I don’t know if speaking to a rep on the phone covers it, so perhaps written correspondence would further ensure that the rate increase is officially “rejected.”
Coming Next Week: Rainy-Day Saver Turns 2!
On Monday, I’ll be announcing a giveaway contest to celebrate Rainy-Day Saver’s second anniversary! I love chatting with other bloggers and commenters — I’ve “met” a bunch of great people. That’s why it’s time to share the love with giveaways. Stay tuned!