My wife received a notice from discover that their raising her apr on purchaces from 18.9 to 23.9.She has never been late or over the limit.It also states this increase was not due to any report thay received from a credit reporting agency.So what could the reason be.When she got the card about a year ago they said that unlike other cards discover does not use the universal default clause.They said she could call a 1 800 number if she would like a written reason why they are doing this.Also she can call and close her account to avoid the new changes.What are these people doing my wife has never been late or over the limit on any of her bills her credit score is around 700.
It's quite possible that she has a variable interest rate tied to one of the indexes such as the prime rate or the LIBOR rate. Her rate will be a certain number of points above the index. Rates have gone up recently, so perhaps that is the reason. They may only adjust quarterly or semi-annually. It wouldn't hurt to call and ask. That seems like a high rate for her score. I cancelled Discover years ago because they were so expensive. So, they give you cash back. If you ever carry a balance, that rebate is quickly eaten up by the difference in their rate and many Visa/MasterCards. They also used to use 2-cycle billing, I'm not sure if they still do or not. If I were your wife, I'd be looking for a good prime Visa or MasterCard with better terms than this.
My dad had a Disc. card that was 4.99 for life on a BT. On his statement in Sept. it was raised to 15.99. He called in a demanded to know why, they told him they sent him a letter notifying the terms were changing. He questioned them, "so basically 4.99 for life really means until you need to screw more people for no reason?" They didn't have a good response for that, go figure. He yelled enough and got them to back it down to 9.99 for 2 months then it goes variable, how generous of them. I told him to apply for blue from amex do a BT and tell discover where to go. They said 55 million ''customers'' were affected over the past 3 months.
The entire CC industry is trying to make as much money as possible now. They are expecting an increase in defaults as a consequence of the mortgage crisis. Also, since Congress is about to review this entire issue of the CC industry, the CC companies are trying to beat what will be new laws regarding these moves. Unfortunately, almost all CC account agreements spell out that they can do this, whenever they want. We as consumers have to be aware that this hangs over our heads all the time.
The problem is that the cc industry doesn't realize that by stepping up this kind of activity to "beat what will be the new laws," they are actually going to fuel the fires of passing these laws. And if the company happens to do both cc and mortgages (like many banks), they're probably trying to make up on cc what they are losing on mortgages.
