What are those credit card people up to?

scarlett2001March 2, 2009

A little while ago I posted here because my "fixed" low rate went up astronomically in spite of my always paying on time, etc. I called and the credit card people basically said you can pay the higher rate or cancel your card. So I scraped up $ and paid it. Left the card active just to send them a message: "How do you like the interest you are getting on my new 0 balance?"

Now I got a letter saying hey, you had a $33,200 limit but you don't use your card so we are reducing it to $12,500. Fine with me, I would never want to owe $12,500 to them anyway. But what are they doing?

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Chemocurl zn5b/6a Indiana

There has been some talk about this over at The Household Finance Forum.

Here is a recent thread. credit card interest rate doubled.

Here is another thread about the credit card companies antics. Anyone experiencing this with credit card companies?

A lot of places are tightening credit, ie lowering limits. My never used GM card went from a $5000 credit limit to $500 recently per a letter I received. Suits me fine as I'll probably never use it as I never carry it.

Discover cancelled a friend's card due to inactivity. She said they informed her 'after' they had closed it, which I thought was rather dirty pool. I think that maybe she had missed reading a previous notification from them or something. Discover has always been my most favorite CC company, with outstanding customer service.


    Bookmark   March 2, 2009 at 8:28PM
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As Dave Ramsey, the get-out-of-debt guru says: "If you mess with snakes, don't be surprised if you get bit."


    Bookmark   March 2, 2009 at 8:33PM
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tishtoshnm Zone 6/NM

In an increasingly tight market, they are limiting their liability. Why be on the hook for somebody who really does not want to use their money and then they have the mula available for somebody who will.

    Bookmark   March 2, 2009 at 8:39PM
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Grainlady - I bite back.

    Bookmark   March 2, 2009 at 8:53PM
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You folks are aware that nobody is holding a gun to your head forcing you to pay interest to the ccard companies, yes? You DO have the option to pay the balance in-full every time a statement arrives. If you choose to carry a balance, then you pretty much have to play by their rules.

Scarlett, if you don't use the card, the cardbank likely will eventually close the account for nonuse. I've *never* paid interest on any card and have not (yet) had any closed because of that. The only instance I've had (thus far) of a card being forcibly closed is one I didn't use for two years. I also have not (yet) had any credit limits lowered.

    Bookmark   March 3, 2009 at 12:59AM
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I have had Discover for almost 25 years, the same account. It's the only credit card I have. I've always paid the balance in full every month. So far no one has said anything about closing my account because I never pay any interest. About five years ago, they upped my credit limit to an astronomical amount. I contacted them and said I wanted it to be changed back to the previous amount. They argued with me some, but I threatened to cancel the account, so they came around. They told me if I changed my mind later and requested an increase I could not do so. I did this because I thought that if I ever had my card or my identity stolen, the card could not be used beyond that limit. Now I know that probably what would happen would be that when the credit limit was passed, I would just be assessed an "over credit limit fee". But I thought I was doing the right thing then.

I received one of those announcements about changes to my account, full of small print. I saw that the interest rate changed but that was of little concern to me since I never pay interest, anyway. One thing of concern that I saw was that you can't redeem the Cash Back Bonus at $20 any more. Now it has to be $50. That kind of annoys me. But then other cards don't even DO Cash Back, so I guess I'm still ahead.

If they ever change the card so that they start accruing interest the minute purchases are made on it and you have to pay that interest at the end of the month, then I will discontinue the card. I have found it to be convenient up to this point, and I do get to "borrow" their money for as much as 30 days, depending on the date of my purchase, without paying interest. However, I do have a bank account and now lots of places where I order things on-line will take a bank account number, or will use Pay Pal, which will take a bank account number. So I would do that if I didn't have a credit card. For purchases made locally, I would just use cash.

    Bookmark   March 3, 2009 at 7:04AM
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"You folks are aware that nobody is holding a gun to your head forcing you to pay interest to the ccard companies, yes? You DO have the option to pay the balance in-full every time a statement arrives. If you choose to carry a balance, then you pretty much have to play by their rules."

Really, Dadoes, that was just a tad self-righteous. I have a balance because my dad was dying in Dec. and my husband and I had to fly across the United States at holiday rates, pay for a motel and rental car and meals for a week, ok? Please don't talk down to people like that and don't be so judgemental unless you have walked a mile in their shoes. I'm glad you have *never* had to pay interest and I hope no emergency comes up to change that. But sometimes stuff happens. It was use the card or don't go. I work in a school and summer jobs are hard to find, so I save all year in case I don't find work in the summer. There was no question of dipping into savings, I chose to use the card. AND that has nothing to do with my original question, anyway.

    Bookmark   March 3, 2009 at 5:33PM
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I'm glad to see this thread. The same thing happened to me a couple of months ago: interest rate suddenly nearly doubled although I pay in full every month. I called to complain and get it lowered and they gave a compromise rate (not as low as the previous rate I'd had) or said they'd cancel it. I thought it might be because of all of Citibank's financial troubles.

    Bookmark   March 3, 2009 at 7:26PM
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Scarlett2001, apologies for offending you and sympathies to your family. I certainly do realize that emergencies can happen. That's what I meant in saying that one must be prepared to play by their rules if such a situation occurs. My Citibank card lists a rate of 10.65%, and I wouldn't expect it to remain that low for very long if I did start carrying a balance. The good thing is you paid off the card.

    Bookmark   March 3, 2009 at 9:34PM
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"What are those credit card people up to?"

Same as you - making their income larger than their expenses. In their case - much larger!

The only people that get my credit card number online are very well-known agencies ... and then only when I contact them. I've received a number of requests for financial information, mocked up to look like the real agency, logos and all, sent by people seeking to steal my identity. When you get such, check the email address that they used to send the message ... and, if you so choose, click on the link that they offer and watch the redirect address(es) that flash across the address line of your screen! But don't give them any info!!

And I don't give bank account info to *anyone* online!

I thought that dadoes comment, rather than being self-righteous, was stating a fact, albeit in rather a vivid, i.e. memorable, form.

As a financial advisor, I've suggested to many that they would be well advised to choose to have 3 months' income, and preferably 6 months', money readily available in case of emergency ... and in the light of current economic uncertainties, more likely 9 months' or a year's income would allow many to sleep better at night.

To a number I've said that I don't have it myself, some of the time, as I have a credit card (recently became two) that usually sits unused, but that I can use to cover emergency needs. Plus a line of credit, fully secured by mutual fund and stock certificates, to arrange a low rate of interest, which seldom carries a balance owing, to use to pay off the (high interest) credit card balance in full by due date.

I may choose to borrow to invest, to increase my assets ... but I usually choose not to carry credit card balances owing over due date for purposes of consumption - I try to pay current expenses from current income.

And, since interest paid on loans used for borrowing to invest is deductible, but for consumption is not, I arrange two lines of credit, one for each purpose, to avoid arguments with the income tax people.

Though my stocks' value has decreased substantially over recent months, the dividends which several produce, which have increased over the years as the value of the stock(s) have increased, are taxed here at a much lower rate than interest.

Plus I don't become taxable on increased value of equities in stocks or mutual funds (with some exception in the case of mutual funds) over the years that I own them, until I either sell them or die, which increases the value of my asset, at no ongoing tax cost. When I sell them, when there's increase in value, I pay tax at a reduced rate.

I figure that when I borrow now for purchases which I could easily defer until I have the cash, I work the hours that I need to, to pay the interest on the loan, at no pay. And enough more hours to cover the percentage of income tax that I pay, as most of the stuff that I borrow to buy isn't tax deductible. For example, if I work 3 hours to pay the interest on the loan and am in 25% tax rate, I must work a fourth hour to pay the tax on the three hours' work needed to cover the interest.

Good wishes for learning how to make your money work harder for you than for the other guys ... then doing it.

ole joyful

    Bookmark   March 3, 2009 at 11:15PM
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I agree it would be so nice if we all had 3 to 6 to even 9 months of savings - but that is really difficult for many of us. I work 10 months a year for a school district, always try to get a summer job, but sometimes it happens, sometimes not. (One year I made exactly enough to put myself in a highher tax bracket so that ate up what I earned.)

Yes, I have my salary spread (so-o-o thinly)over 12 months and I belong to my credit union's summer saver program - it just isn't enough. You can only stretch it so thin. I would love to leave and get another job but I am very close to retirement and because of my age, not too marketable, especially in this economy. People seem to think that school employees get a "Vacation" every year- no, it's actually a two and a half month layoff every summer, but of course we are not eligible for unemployment. So imagine you had such a layoff every single year and had to live on your earnings for a ten month period, stretched out over the whole year.

When I had a nicer job, I would also give other people breezy advice like "Never run up a balance on your credit card", "Have 3 to 6 to 9 months salary saved" etc. But now the shoe is on the other foot and I see that when your earnings are low, you have a greater chance of getting deeper in debt, if you don't watch out! And sometimes - like my father's death - you just have very little choice.

    Bookmark   March 4, 2009 at 12:04PM
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It is a problem. About the only way around it is to *always*, ALWAYS live below your means when times are prosperous. Save, save, save, and don't spend the nest egg on a vacation trip, boat, fur coat, etc. just because you have the money. I'm not saying you did that, Scarlett, it's just general advice to anyone and everyone. Keep the savings separate, and save further for those special items.

    Bookmark   March 4, 2009 at 7:17PM
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Hi Scarlett - and others,

I'm sorry if I hurt your feelings by offering " ... breezy advice". It was not my intention to do so, at all. It has been developed over many years of sometimes difficult life experience. I have been feeling sad recently because, while some clients and prospects made a substantial effort and succeeded in assembling several months' income, many, whether because of very low income, lack of skill at financial management, or lack of commitment, did not succeed in doing so. Now that we are undergoing difficult economic times and many have been laid off, they are suffering much more than had they succeeded.

I offer that last as a comment, not a criticism: I value my freedom to choose to live in a way that I choose, and am exceedingly thankful that I live in a country where that is possible ... but I respect the right of others to have that freedom, as well.

I was born in a year that's become infamous in our economic cycle - 1929, though 1931, 1932 and 1937 were difficult years, as well. While I was too young to be fully aware of the difficulties, they were part of the atmosphere as I grew up. My Dad had one of the larger farms locally, but we felt that things were difficult. Dad was complaining to the banker about 1940, saying that he felt that he had done a lot of hard work during the past 10 years (his 30s), but seemed to have accomplished little. The banker said that he had upgraded his tractor, got a better car, installed a drilled well and brought piping not only into the house, but into three barns, one some distance away, as well - but that many of the local people had been unable to increase their assets at all. I first experienced hot water on tap, and a flush toilet, at age 18, when I went away to university.

I also worked for a time among people who'd left everything, with their clothes on their backs, some with a suitcase, if they were lucky. Trying to get your life going again when you live where there's been a major war, with much of business and industry being shut down, and where there was major unemployment prior to the war, is not a pleasant boat in which to row.

I have known some (not really comparable) difficulties in my own life, as well ... and, hopefully, have learned a few things ... which I pass on, from time to time ... and which others may choose to make what use of that may suit them.

Grandma (who'd never had anything to do with England), who died in 1950, used to say, " Take care of the Pennies ... and the Pounds will take care of themselves".

Good wishes for success in arranging your life and income level, and your approach to life.

Isn't it interesting that when we visit a number of areas of the world where people are as poor as church mice ... many are happy, exuberant people, with a smile on their face ... while in our area, many people, a number of whom are much more prosperous, look so sober and serious ... as though they carried the weight of the world on their shoulders. Brother, a retired farmer who recently drove around Toronto with his son, commented on that situation while on the phone, a couple of hours ago.

ole joyful

    Bookmark   March 5, 2009 at 3:26AM
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I got notice from HomeDepot (citi card) that my rate was going to from 21 to 26.5% so I picked up the phone and called the number. I listened to the person on the other end read basically the same thing my letter stated and after that was over and I plead my case that I did have some still owed on my card that I should be able to keep my rate for a couple months until I could get it paid down. That was not an option without shutting down the card.

It was at this point that I notified the person that I was going to contact my attorney and sue Citibank, Home Depot, and him for sexual harrassment. He got very peeved and informed me 'he was not that way' and I informed him that the letter stated Citi wanted to screw me and he confirmed it and did nothing to attempt to spare me from it. He didn't see the humor in it but it sure caught him off guard!

I couldn't imagine trying to pay off some of the cards people have that owe 10k+ or even 5 at 25+% interest when it used to be 12 or so.

    Bookmark   March 8, 2009 at 1:14AM
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Scarlett, I don't think anyone has intended to give you "breezy advice", so I too am sorry if I have contributed to your hurt feelings.

DH and I have been through several periods of difficult times.

When we were first married, he didn't tell me he had debts from his previous marriage that he had walked off from when he joined the Navy. We returned to the same area after his discharge, and his creditors found us after we had acquired some cheap furniture and a car, on credit. Let's just say, at that time, "The Honeymoon was Over". The unexpected debt put us in dire straits because by that time we had a two-year-old and an infant.

The car was totally an unwise purchase. DH wanted it so badly and he and the car dealer ganged up on me. I could've been the bad guy and refused to sign, but DH was getting lots of overtime at his job and I was lulled into a false sense of security at the ripe old age of 23. Of course the overtime dried up soon after. Then the car payment took all of one week's pay and then some. Shortly after that, there was a trucker's strike (this was in 1970) and DH was certain he would be laid off.

So instead of waiting for the inevitable, he drove from KS to IN, where his brother lived, because his brother told him jobs were easy to find there and they paid higher. What he neglected to say was that the standard of living was somewhat higher there, too. DH found a job there and a house to rent, so we piled our meager belongings into a U-Haul trailer and moved. I was not one to run out on debts, so our landlord was paid what we owed and we notified our debtors of our new address.

Of course this did not solve our financial troubles. It took me far away from my family and put us in an area where snow is on the ground from before Halloween to Mother's Day. We discovered our landlord was an alcoholic who was given to coming to my door and screaming at me for some imagined offense. His wife would let herself in while we were gone (they lived next door) and inspect, and leave me nasty notes. But I digress.

I take the credit for getting us out of debt. I went to the library and checked out everything I could find about how to save money. One of the books I remember well was "Champaigne Living on a Beer Budget". It was then that I learned about how credit works, among other things.

That first winter, I made my son's coat out of DH's Navy dress uniform. My daughter's coat was made from mine, as I had found a coat for myself at a yard sale. My mother had given me a bag of fabric scraps and I made my kids' clothes from that. I didn't have many clothes but I wore what I had. DH, for his job, had to have matching twill pants and shirts and steel-toe boots, so that took a chunk out of his pay.

The first thing that I did with my new-found training, was to contact each creditor and ask them what was the least they would take to cancel the contract. I was surprised that they all had an amount right on the tip of their tongue. One of them quoted a realistic amount, that I could meet by arranging with the bank that held the car loan to just pay the interest for a couple of months. I shut everything down that I could. We ate a lot of macaroni and beans, drank nonfat dry milk. DH had no room to complain because they were, after all, his debts and he was in a long-term doghouse as it was. Getting the first creditor paid off was the hardest, but it was the "chink in the armor". With that payment off our backs, I was able to double up on the payments for another creditor, specifying that additional payment was to go ON THE PRINCIPAL ONLY. Before long, I had another one paid off. That following summer, we had enough money that I could use $20 every other Saturday at yard sales. When my $20 was gone, I was done. But I managed to buy, through that summer, jeans and coats and shoes for my kids, toys for the coming Christmas, tools for DH.

When the magic day came that the car was paid off, it was like Christmas to me. Gradually we got on our feet. We bought a mobile home on credit and moved into a trailer park. It was our own home and the payment and lot rent was less than the rent we had been paying. Plus it was closer to DH's work. Then he was laid off. Then our son had an illness that landed him in the hospital and us with no insurance. DH got another job. He took a second job at a gas station. I used my skills to get things paid off. But it was hard because he still just "didn't get it". He thought he deserved something for all the hard work he was doing and kept buying things on credit: color TV's, expensive fishing equipment that he hardly used, an El Camino. I refused what I could, and we fought almost constantly. At one point it looked like our marriage was over. I was so sick and tired of being poor and him not taking it seriously. I took the kids and moved back to where my family was. He ended up selling what little we had and following, and we managed to patch things up, but it meant we were starting over again financially. I was able to get a job that paid pretty well, so at last we were able to have two incomes, but it meant the kids, by then 11 and 12, had no one at home with them. They got into so much mischief. If the neighbors weren't complaining, the kids were tattling on each other. But we were able to scrape together enough to buy a house in an older neighborhood that was not far from work for either of us.

As time wore on, I doubled up on the house payments to shorten the length of our loan. Eventually I had the house paid off. We saved $17,000 in interest. Neither of our kids went to college. Our daughter dropped out of high school and our son, though he graduated, was not college material. DD made me a grandmother at the age of 42, and then didn't take her maternal responsibilities seriously, so we threw money at that problem for awhile. Then DH began having trouble with his knees and we discovered he had degenerative arthritis. Not long after, he became disabled. I had quit working, so I had to go find a job again. Shortly after that, it became clear we were going to have to adopt the grandsons. Then our son started having panic attacks and we had to throw money at that for awhile.

And now, here we are. DH is 65 and I am 62. He has finally been able to have surgery, recovered well and is getting around better. Our grandsons are 18 and 19. The 19YO will graduate from HS this spring. The other is with DD and will probably drop out, not having applied himself and having nearly enough credits to be able to graduate any time soon. DS has managed to recover. We bought a small house that he lives in. He pays us an agreed amount every month and the house will be his soon. DD has just had bariatric surgery and then lost her job, so she is now looking for another. We bought another small house that she may end up having to move into for awhile. We are considering offering her the same opportunity to own a home that we offered DS. Neither of them have good credit so a conventional loan is out of the question for both. It seems everyone has to learn how to manage their money the hard way.

But we are not in bad shape, considering all. We owe no debts. We own our own home plus the two little houses, free and clear. We own one recent-model extended cab pick-up. Signed our 12YO pick-up, that was well cared for, over to DGS that lives with us. We have money in the bank. I am now retired. My retirement check starts this month. It's not huge, but it's more than I thought it would be.

Sorry for the length of this, but it illustrates the ups and downs of life. There have been times when I thought we were in such a horrible financial mess that we would never be able to recover. But we did. It took some know-how, but mostly just dogged determination. I shed many tears of hopelessness and frustration, spent many sleepless nights of worry. So trust me when I say "live within your means" and "Pay off all your creditors", I speak from experience. There is nothing breezy about it.

    Bookmark   March 8, 2009 at 10:00AM
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tishtoshnm Zone 6/NM


Thank you for taking the time to post your truly inspirational story for those of us who need it. I look forward to the day when I can add my family's success story too.

    Bookmark   March 8, 2009 at 8:09PM
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I too want to thank Ilene for taking the time to post her story. It was inspirational & encouraging !

    Bookmark   March 8, 2009 at 11:03PM
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Ilene, - I'm so glad you hung in there and saved both your financial situation and your marriage. Inspirational story. However, I have never been in debt to that extent and hope never to fall into it. The question I asked was why the Credit Card people are doing the things they are.

Dadoes and Ol'Joyful, I apologize for my ill-chosen words. Not to make excuses, but I have been somewhat weird and TOUCHY since the recent events. They tell me I will be "normal" again soon - oh, SURE!

Ol'Joyful, Thank you especially for putting things in perspective so well with your reminder of how the rest of the world lives. I feel completely silly for dwelling on minor credit card issues and magazine subscriptions when most of the world goes to sleep hungry and even has to watch their children do without. I was being a typical spoiled, self-absorbed American. You are very wise and we all need to back up once in a while and see the Big Picture. Thank you for that!

    Bookmark   March 9, 2009 at 4:08PM
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Hi Scarlett,

Thank you for your message. Our day to day issues do trouble us at times ... sometimes perhaps more than they should - but they are close by, right in front of our eyes. And we humans have that predilection to put a much greater emphasis on our own issues than on those of others.

I suspect that we who are retired who have time on our hands, plus receive adequate pensions, so need spend little time worrying about income, also, with our offspring out on their own, have fewer essential expenses about which we need to concern ourselves, have the luxury of being able to concern ourselves more about issues relating to others in our community and in the larger world.

In these times of economic upset and uncertainty I think that it is even more important for us to invest our time, talents and energy, plus some funds on occasion, to help keep our communities places where people feel reasonably at ease, comfortable and happy.

I've known some difficult times on occasion, though have never had serious debt (have never bought a home) ... certainly not credit card debt.

Some time ago when I had a display about money management and tax savings at a village fair and a man asked me what right I had to call myself a financial advisor, I told him that the situation where I began to learn to look at money differently than most folks was when I grew up on the farm.

He told me that had nothing to do with it ... and I told him that all that I had to offer folks was looking at money a little differently than they, for if I evaluated it the same as they, they wouldn't pay me to talk to me. And if I looked at money very differently from they, they'd have no more to do with me - "I'm not going to trust guidance for management of my precious money to that flake!". And, as I sold no financial products, so had no conflict of interest, I had to charge for my time, if I wanted to eat.

And that farmers, many of whom have seasonal income, which varies in amount from year to year, as well, must not consume most of the proceeds of a good crop when they receive it, or even during the following year ... or they'll regret their profligacy when tough times appear. Also, they must give much more thought than most city people to the management of their capital - to repair the tractor or trade it, to repair the barn roof this year ... or do some tiling of the fields ... and they need a larger combine ... should they trade up this year ... and buy new, or used at a local farmer's auction?

Learning how money works - an interesting hobby - that pays well.

Good wishes to you and family, Scarlett.

ole joyful

    Bookmark   March 9, 2009 at 9:26PM
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