Just got a change in terms letter on my ATT Universal account regarding APR increase and change the calculation of the minimum payment. If this method is what the others are going to use, it may not be so bad, at least not the 4% we were wondering about. My terms are as follows, after they raised my APR 2 points. (I have zeroed out my CITI accounts because of crap like this. My APR was 9.99 a year ago, now up to 16, scores in the 780-835 range) Minimum payment calculation as follows: Take past due amount (if any) and add any amount in excess of credit line, then add the sum of all calling (?) transactions posted to account in the billing period. Last add the LARGEST of the following: New balance on the statement if it is less than $20 $20 if the new balance is at least $20 1% of the new balance plus the amount of the billed finance charges and any applicable late fee; or 1.5% of the new balance. In calculating all these options, I have no late fees or past dues, and at 1% or 1.5% of the balance of a typical month in the last year, the minimum payment goes down a few bucks. I took my BOA (Fleet) balance which is the highest I carry at prime APR until paid off, and at this formula the 1.5% payment went from $250 to about $190. My other BOA account is presently at the same terms, with a payment of finance charges plus $10. I wish it would stay there, but it may change. ;(( Of course, Greenspan can't keep his nose out of the prime rate, so who know where THAT will stop. My son has a CITI account with a very low FIXED APR. In any case, as I posted earlier, Chase is at 3% of the balance, Discover at 2%, and Providian at 2.5%, so no one has yet gone to the dreaded 4%. I can't vouch for my math...anyone else coming up with the same results? Jenz?
They can make their terms as unattractive as they want, but they can't expect to make more money by doing so. At some point money isn't worth borrowing; its worth paying off.
I just got an offer to upgrade my BoA to a Signature Visa and it's about the same terms as yours. Finance charge, overlimit or late fees, past due fees, amount over limit (it has no preset but anything over the approved limit you have to pay in full), and $10. So maybe only a few are going to the increase.
In a growing economy you want to grow both market share, and account size, as your customers' finances improve. Credit card accounts are not the frothy part of the credit market (despite what Jimmy Carter claimed in 1979). They are generally at or above prime, and at some margin above the banks' cost of funds, depending on risk. Interest rates and credit limits can be changed virtually at will, subject to risk change and market interest changes. I might be more concerned about the amount of interest only and ARM loans available to encourage homebuyers to overextend in some markets. As interest rates rise, borrowers in these types of loans get squeezed, even as their property prices may be depressed as interest rate increases affect what a new borrower would be able to afford. Not a good position to be in if a significant part of the housing stock in an area is financed that way. In the long run, property prices are driven by local income, and can't increase indefinitely faster than income.
One additional note. My Chase minimum was increased to 3% last month and I emailed a question about it, and the statement online today shows it is back down to 2%. I believe I have been moved up a notch in the Chase system, because they wouldn't increase my CL before, and I just got an offer for a good balance transfer and CL increase if I transfer above my current CL.
