Beware Capital One!

Kaarina, it is not just Capital One doing this. My Citi card also did a whopping big jump, and like you I have paid on time, yada, yada.

I noticed that one of my cards did this also. I called them wanting to know why. I never missed a payment. When I have a large amount, example, airline tickets, I paid $600 to $800 a month until paid off. When the women on the phone stated that it was probably because I missed a payment, I asked her when. When she couldn't tell me the reason for the increase or give proof that I missed a payment, the dropped the rate to the orginial amount. I think they do it just to see who will just pay it. Crooks! That is why I hate having a balance on any cards.

A lot of cards have a "universal" clause that most people are unaware of. It means that if you are late - not necessarily on that credit card payment, but on ANY payment - even something like a utility payment - then they have the right to raise your interest rate. They definately are dirty crooks trying to take advantage of those who have the most difficult time paying. This is one reason it's an excellent idea to never carry a balance.

Don't carry a balance and your less likey to have a rate increase.

I just called them and they told me that my interest is lower than what others are facing and there is nothing they can do. I told them that they are digging they own grave doing this to good customers that pay on time and I am going to pay it off and never use it again.

Yep, Citibank did this to me a couple months ago, right after they got that huge bailout money from the government. Pissed me off. I called and they said they could only reduce it by 2%. They also told me it was nothing I did wrong, that I just "fell into the parameters". Yeah, right.

I transferred my balance to a 0% Capital One card and called Citi to close that account. They begged me to stay and finally offered me 2.9%. I told them to go jump in the lake. Capital One will be gone before the end of the year too.

Yeah, Citi did this right after the bailout. Only thing that kept my blood pressure in check was knowing I have not carried a balance for years. Citi is not making any money from me, fortunately for me, so I have not complained, as yet.

The people they (meaning any card company doing this) are hurting the most are the ones who can least afford it. The bully of the playground picking on the little ones, taking their lunch money, because it is possible.

And, yes, funnest way to use a credit card is never put more on it than can be paid off each month.

With the state of the economy, rising foreclosures, increasing unemployment, the credit card companies are worried that people will stop making payments. So, they increase rates to get you to pay off your cards.

American carry more debt on their credit cards every month than any other people on the planet. It is a bad thing.

And I find it funny because on another thread we're discussing how Europe has changed us. I guess one of the things many haven't adopted is the European way of living within your means. Most Europeans don't have all the "stuff" we insist on having.

A couple of years ago I got a credit card to use for renting cars when I travel. I never used the card except for the cars. So after a year or so I got a bill saying I owed S45.00, when I looked closer knowing I hadn't used it for anything they were charging me a "non usage fee" in other words charging me $45.00 for the honor of carrying around their card. Needless to say it was canceled that day!

Now regarding the interest rate increase how do you folks expect these fine people to afford their 7 to 10 figure bonuses and private jets!

"And I find it funny because on another thread we're discussing how Europe has changed us. I guess one of the things many haven't adopted is the European way of living within your means. Most Europeans don't have all the "stuff" we insist on having."
Most credit card debt in the US is from medical expenses. As most all Europeans have state funded medical coverage, there's no reason to charge prescriptions, and doctor/hospital visits; therefore less debt. Europeans like their toys just like Americans.

Michael, I find it hard to believe that MOST credit card debt is from medical expenses. I'd like to know where you gained this knowledge.

As for carrying a balance or not, it really doesn't make much of a difference in terms of whether they will jack up your interest rate or do anything else to change your account terms. My sister has an Amex that she runs all of her monthly expenses through (to earn points toward hotel stays). She always pays it off every month, and has never had a late payment. The account had a huge credit line. She recently received a letter telling her that her credit line was being slashed to one fifth of the former limit, which isn't enough to be able to run the monthly expenses through. She thought that once she talked to them, they would fix it. Nope. Credit is tightening up all over, and they weren't making any money off of her, so her account was expendable.

Yes, Michael, I too would like to know how you got the information that most credit card debt is for medical expenses. I've never heard that.

I have no doubt that medical expenses cause a lot of credit card debt, but there is a difference between a "strong correlation" and "most of the US credit card debt".

You asked for proof, here are some articles/studies on the subject:
http://tinyurl.com/bwwa6h
http://tinyurl.com/dkfjds
http://tinyurl.com/bhkb5c
http://tinyurl.com/577wa
If there is a silver lining to credit card companies slashing credit limits and increasing rates: it's possible that when millions of Americans can no longer physically charge their medical bills, there will finally be some sort "real" public outcry over our broken health care system. Maybe then our politicians will adopt some sort of universal health care.

I think I recall reading that medical debt is the major cause of consumer bankruptcy, not that the majority of credit card debt was medical costs. It is true, though, that hospitals and doctors are much less likely to treat low income patients now on a sliding scale than was true even a few years ago. Now it's "Are you sure you don't have a credit card you can put this on?"

The recent bankruptcy changes have made it much harder to deal with catastrophic medical expenses. I suspect that the new administration will ultimately have to rein in the banks and their credit card policies.

The one bank that has never done anything I considered underhanded, USAA, just sent me a similar note. I closed it and may move my insurance.

Just a word of advice-Medical expenses should never be put on a credit card. Aside from the high interest issues, it then becomes cc debt on your credit report and not a medical expense that may be excused. Never be pressured by medical services or collection agencies to charge it on Visa/MC. It pays them off but harms you. I'm with Michael-time to do something about health insurance.

While I'm not going to deny that medical expenses are a part of credit card debt for those without insurance, the articles Michael mentioned all based themselves on that "Access Project" report.

If you read carefully, it never says that medical expenses are the major cause of credit card debt. It says that medical expenses contribute to credit card debt and those without medical insurance have higher credit card debt related to medical expenses.

But then, what is this "Access Project." Well, here's how they describe themselves on their website:

"The Access Project, which was founded in 1998, is a resource center for local communities working to improve health and healthcare access. Our mission is to strengthen community action, promote social change, and improve health, especially for those who are most vulnerable. By supporting local efforts and community leaders, we are dedicated to strengthening the voice of the underserved in policy discussions that directly affect them."

Now, I'm not here to argue the health insurance/health access issue (I think it's terrible that anyone in the U.S. has to go into debt just to be healthy). But, it did not prove the statement made by Michael that MOST credit card debt is caused by medical expenses.

And sadly, this is one of the problems with blogs and disseminating information on the internet. Data can be interpreted by anyone and posted as fact unlike a major news organization where a trained journalist and editor is supposed to stick to fact. Sadly, that's changing as well.

It's not just Capital On ethat is doing that. Citibank and AMEX as well.
If you don't pay off your credit card at the end of the cycle, they would raise your APR and even cut the limit. I read online that the banks are doing this because a lot of people now can't pay their dept.

Kaarina, it's not just you that this has happened to--here's a link to an article posted on CNN's website yesterday.

Banks Raising Interest Rates...

Let it go, Frank. We would all agree that basic human medical care should be available to everyone...rich or poor. The system we have is badly broken and unfortunately falls heavier on the backs of the poor. Credit Card Companies are out to make money any way they can. No, I should say they're out to make a FORTUNE from anyone anywhere anytime and any way possible.

Medical Care should not be so out of reach that people must resort to credit cards to pay for it.

I'm thankful that I have a job, that I have medical insurance, and that I can pay off my credit cards in full every month to avoid being victimized by unscrupulous credit card companies.

I don't know if it is just me but I think that it is getting hot around here again!

Ouch!

Don't worry guys,
I had no intention of antagonizing Frank. As I mentioned before: I consider myself a guest in this forum, which is afterall American, therefore I have deleted my offending posts.
I'll be more careful with my comments from now on.

And I have done the same....

Corinna: You are a guest on this forum just like all of us. Of course your opinions and experiences are just as valuable as the rest of us!

Thank you, Tim, that's very kind of you!
I seem to keep stumbling over some tripwires here and there. The last thing I wish to do is offend anyone.
If I was anti-American I wouldn't post on this board, but I realize that my freewheeling comments aren't everybodies cup of tea. I am trying to respect that.

I'm not sure what Corinna said in her posts, but the articles that Michael offered were biased. One was the research report from a group that has a specific ax to grind. We may or may not agree with their premise, but it doesn't mean they are unbiased. Two of the other three articles he posted were news articles reporting on the research article. The third was completely unrelated to credit card debt and was instead talking about medical bankruptcies. Of course, people who claim bankruptcy have cc debt, but it doesn't mean that most cc debt in the US comes from medical expenses.

Either way, this thread isn't about universal health care. It is about cc debt. Michael, I don't believe that your reports prove what you say they do simply because they are biased and were not "neutral research". If it was really the case, there would be more than one research report on it.

As for interest rates, I'm with the others who say, don't carry a balance. I don't really care what my interest rate is because I never pay interest since I never leave a balance. If you have to leave a balance on your cc for plane tickets, then you shouldn't have bought them yet. You should have waited until you could pay cash. That is just my opinion and I'm not here to denigrate other people's choices. But I do believe that you should live within your means. Of course, there are many in real poverty that don't always have this choice, but I'm really speaking to those of us on the board - and if you are taking a trip to Europe, your not really in poverty. My wife and I are both teachers, and if we can wait and save up cash, so can everyone else.

If you don't want to, fine with me, please don't get mad. I'm just simply stating my thoughts. I don't think people who make other choices are bad people, and I'm not judging you and your choices. I'm simply expressing my beliefs.

Cary what's with the hostility? It's obviously your right to disagree with the conclusions of the report. The original point I was trying to make was that comparing the CC debit of Europeans and Americans is like comparing apples and oranges. Europeans have no reason to charge medical services because of the universal health care provided to them; lots of American do charge these services. Is this really that far-fetched?

Michael, I don't have any hostility, I was simply pointing out the biased nature of the articles. I don't disagree that many Americans charge their medical expenses. I disagree that MOST cc debt is from this cause. My point was that the articles you posted all had a vested interest in saying that cc debt stems from medical issues. The research was not done by an unbiased source and I was pointing that out.

By comparison, Europeans also don't generally own two cars per family, more televisions than people per household, and don't move into 3,000 sq. ft. homes. There are a lot of things they don't have that we do. Some of them, we shouldn't have as much of if we have to buy on credit.

Just my opinion.

I guess we will have to agree to disagree. Feel free to post some unbiased studies documenting how Americans use credit cards more recklessly than Europeans. I believe the largest cell phone manufacturer is based in Finland (Nokia), one of the worlds largest electronic companies is based in Holland (Philips), two of three largest retailers in the world are from France (Carrefour), and the Netherlands (Ahold). Our friends from across the pond must be spending their money on something ;)

Cary, I will pay the cc off. I used it for convenience, I do not want to use my debit card on the internet, but I am not stupid and won't let them rip me off. Luckily, I do have money in the bank but not everyone is as fortunate.

Medical costs are a big problem in this country even if it is not always associated with cc debt. Most bankruptcies are because of medical debt.

One thing I know, is that in Finland you can not carry a cc debt. You have to pay it off every month. Credit cards are not the same as in here. People do not spend as freely as people do with ccs here but everybody does have a cellphone :). Actually everyone had a cellphone way before it became common here.

From USA Today:

More Americans using credit cards to stay afloat

Kaarina,

If you pay your bill off every month, then the interest shouldn't be an issue. On my card, no interest is paid unless I leave a balance on the card after the first "due date" after a purchase. That being said, I don't disagree with you that the CC companies are crooks...I just go in knowing that ahead of time. If you refuse to deal with crooks, then you can't have ANY cc - even a Finnish one! :)

If you are not allowed to carry a balance on a Finnish cc, which I have no reason to doubt you on, then their cards must have a different sort of interest scheme (daily, weekly, etc.). The only way a cc company makes money is to charge interest. Those of us who pay it off every month are the credit industry's worst nightmare.

Michael - As for providing an article about how we use credit vs. Europeans, I don't have one to offer. But then again, I wasn't the one to make a bold claim that goes against prevailing thought.

As to your point about how we spend our money differently that Europeans, if you read posts on this website as well as many, if not all, travel guides, you will notice how many people remark about how Europeans don't waste nearly as much as Americans. How they don't go out as often, they live in smaller spaces, they reuse and recycle more than we do, and they were way ahead of us in using cloth grocery bags and charging for the plastic ones.

I have no doubt they spend money. But spending money isn't the same as using credit. However, there is also a credit crisis in Europe at the moment just as there is one here, and I am sure that there are thousands if not millions of Europeans who were living above their means just as many Americans have done. In the end, if you use a cc to "just get by" then sooner or later you will get in over your head.

Cary, I just go by what my dad tells me about the credit cards in Finland. Maybe they make their money from the businesses like American Expess but I do not know for sure. When I grew up there, if you couldn't afford to pay for something out right you could make payments with no interest but you got the product right away unlike with layaway here.

I pay most of our bills by CC and for several reasons: 1) one time I needed some short term credit...2 months for our small business. It was way more convenient than going to a bank and going thru all the paperwork involved in getting even a short term loan. 2) I prefer the convenience of paying most of our bills, personal and business, once a month...with one personal check and one business check, rather than paying dozens of bills either by mail (postage isn't exactly cheap these days), or the hassle of delivering payments on foot or by car. Our bank just debited our account $19.95 for reprints on personal checks. 3) Carrying my wallet(with a CC) is easier than trying to also keep track of a check book. Of course we use our debit card in place of a checkbook as often possible, but not all places are set up to take plastic. 4)Of course, the CC racks up points, which we use exclusively for airline travel...so why not maximize this option, as long as you pay it off every month. Just my 2 cents worth!

This happend to me also. I had a Capital One card that I kept for travel. I always paid everything on time. I did not have a balance on it but was planning on using it for my upcoming trip. I have a 9.99 % rate. I receievd a letter from them 2 weeks ago stating they were changing my rate to 29%!! I immediately cancled my account! That was the worst rate I had even seen. I have had this card for about 8 years with excellent credit.

Way to go Bob, that will show them! Let's all get rid of these stupid credit cards! I am sick of them! I truly feel that they are digging their own grave doing this to people with good credit ( 820 here ) who pay on time and make big payments.

I'm with Capital One and just checked - still at 6.9%.
A year or so ago they raised it up to 9.9%, but then they brought it back down.
Ever since I added the rewards feature, I use my card for almost everything. But I also pay it off monthly. If only there were a way to pay my mortgage with the card (and continue pay it off monthly...) the rewards would be fantastic.

This happened to us with Citi Bank. But I was aware the banks were going to do it to get us to help pay for their poor management of the past.

We called to complain and told them we were aware of what was happening and would not stand for it. Ant in fact two other banks had made us offers to get their cards (not really true).

The out come was the rescinded the rate increase, dropped the new rate lower than what we had and then gave us 6 months with 0.00% interest.

I should say that we pay our card bills promptly and do not carry balances, so it is meaningless until such time as we need to use the card limits.

Suggest you try this with your bank. It might work.

Just a note as someone who actually WORKS in healthcare and deals with people and thier debt to us routinely.

Those articles and sources cited above my Michael.... LOL! In any study you can change the way facts are reproted to make your case.

Now yes, medical debt does contribute to credit card debt and often our patients families are living off thier credit card while thier family members are in the facility so that's definitely a factor. IT may appear as the "Holiday Inn" but it might be due to medical issues. That's very hard to quantify.

However, most consumer debt is just that.... consumer debt.