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Frustrated by rising credit card rates

E-mail|Link Posted by Jill Boynton May 28, 2009 10:00 AM

I've never missed a payment, never been late on my payments and my credit card company has increased my rate to 31.99% on close to $6,000. As a result, even if I make the minimum payment which also has sky rocketed, because of the amount of interest charged, I am over the limit and they charge me for that as well.

I called the card holder, spoke with a supervisor and they refuse to work with me so I told them I will not make another payment on this account. Although the bank wishes to be unethical in their practices, I am having a hard time with not paying my obligations, but I cannot continue to throw money away, especially if they are conducting themselves in this manner.

Paying 31.99% is not an option so are there options or government programs that can assist. I want to pay my debt but the bank just wants to screw me, I guess I will be yet another charge off account to add to their list instead of trying to work with customers who want to pay.

Rising credit card rates are becoming a common problem, one we hear about more and more frequently. And it is affecting everyone – those with good credit and those with poor credit, cardholders who pay off their balances monthly and those that don’t. It seems to be an almost across the board action. What can the cardholder do?

It’s understandable to be angry and frustrated about this unexpected and severe rate hike. However it’s not wise to stop making payments altogether, as this will only hurt you in the long run. The credit card company may lose $6000, but it’s your credit history and credit score that suffer.

The first priority should be making a big enough payment to bring your balance under the credit limit so you stop incurring the extra charge. Then your focus should be on adjusting expenses in other areas so that you can direct more of your monthly income towards paying down this high-rate debt as quickly as possible. In the meantime, of course, don’t add additional charges to the card. Help is available through the Consumer Credit Counseling Agency, which offers free help on line, on the phone or in person. Avoid debt consolidation services that charge a fee to negotiate with credit card companies.

You can find information about Mass. state laws on credit here.

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

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About the contributors

Jill Boynton is co-founder of Cornerstone Financial Planning in Newington, N.H. Along with traditional financial planning services, Boynton provides analysis specifically for divorce.

Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.

Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master’s in business administration from Boston University.

Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.