My Discover card balance--which is about 11,000 ($)--has an APR of almost 26% applied to it for no ostensible reason. Here's a copy of a recent communique between myself and Discovercard's online "customer service." ---------------------- Dear Discover Card: The current APR of 25.74% you are assessing my account balance is outrageous, considering my very good account history with Discover and other creditors. The APR makes it unlikely that I will ever be able to pay off the balance, and increases the likelihood that I will have to find another way to deal with this balance. Please advise, JM --------------------------------------------------- Dear JM: Thank you for your message about closing your Discover Card Account. As you requested, your Account has been closed as of May 6, 2005. Because the Account is closed, we do not have any options to lower your interest rate. I apologize for the inconvenience. Although your Account is closed, information is still available to you at the Discovercard.com Account Center. You may view your statements for the last 12 months and continue to make online payments. Regards, Christa -------------------------------------------------- Christa: My inquiry was not about "closing [my] Discover Card Account." There is no logical reason that my account's closure should preclude your doing something about its interest rate. Indeed, the rate is subject to change regardless of the account's open or closed status--as indicated in my cardmember agreement. Now, please look a bit further into what you can do regarding the by all standards undeserved APR Discover currently applies to my debt. I am prepared to pursue this question until I you provide a satisfactory solution. JM ------------------------------------------- Dear JM: Thank you for your reply. Unfortunately, we are unable to lower your interest rate on the Account. We appreciate the time you have taken to contact us today. Sincerely, Christa
"The APR makes it unlikely that I will ever be able to pay off the balance, and increases the likelihood that I will have to find another way to deal with this balance. " Not a tactful argument, although at this stage you're headed for the door anyway. Transfer the balance somewhere else, the sooner the better. Did they send you an adverse action notice indicating what report they pulled resulting in the rate jack? That is what you need, to find out which report triggered this, and they are required to send it. What was your CC debt to available credit at the time they raised your rate? Were there any negative items on any of your reports?
No--they sent no such letter. My available credit wasn't much. And yes, I had some negative items with Discover--but I disputed them; they assessed a late payment fee when I payed the minimum due indicated online--they claim the minimum due was higher... In any event, considering my record with them--and all of my creditors--plus my income, I am by no stretch of the imagination a risk--or deadbeat; I don't deserve such a high APR. I know this sounds naive--or something that everyone says, but it's true. I'd be the first to admit it if I felt that I "deserved" singling out...
If you don't deserve their actions, then they don't deserve your business. Build your credit relationships with those who value them. Those who don't are toxic. Request your adverse action notice, in writing. Include in your request that you did not close your account, and both increasing your interest rate and closing your account are adverse actions. If that gets no response, re-request thru channels that make non-compliance visible. Since they have trashed your account anyway, you might as well prod them to comply. It will tell you if they are systematically non-compliant, so you know whether to consider them in the future.
Hey OT, Interesting position. Q: Is the exercise of the "Universal Default provision" an adverse action, thus requiring a notice? Can you substantiate this? I can use this myself. : )
It appears to be the FTC view that an adverse action is any poorer terms that result from a review of an account where the decision was based on information from credit reports. The key issue is that the consumer be made aware of negative information that a creditor has obtained from credit reports that has affected his terms, so that the specific CRA used be disclosed so that the consumer can determine if that information is correct or needs to be disputed. In the case of insurance, some courts appear to have bought insurance company positions that no disclosure is needed if a policy was still offered (no denial, but no prior policy to have terms poorer than), but disclosure in the case of either denial of credit, or a change of credit terms, appears to be more clear cut. If your CC statement shows a rate increase that was based on credit reports, see if it contains a notice that you have the right to request what CR they pulled to make their decision. It should be there. If you then send a letter within 60 days requesting what report they pulled, they should provide it. A copy of that letter sent to a CRA triggers the CRA requirement to provide a free report, although they seem to provide a free one if there is a plausible inquiry. See FCRA, Section 615. http://www.ftc.gov/os/statutes/fcra.htm#615
Universal Default provisions are based on late payment information in TLs of other creditors obtained by pulling AR credit reports. Since the decision was based at least in part on information obtained from a credit report, that would clearly trigger the requirement to provide an adverse action notice under FCRA. Also see FRB Regulation B.
