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Scott,
I carry multiple credit cards and have enjoyed
very much having banks compete for my business. Thanks to your publications, I have several fixed-for-life, low interest accounts, some of which are only 1.99% APR.
Now, due to this financial economy mess banks are running scared. I have
had unused credit cards closed by the issuer. Available credit reduced to just
above my balance on a few accounts. Last week, my Bank of America American
Express card took a major rate increase. I had a fixed 7.99% rate, which I
enjoyed for two years. I carried a high balance on this card because I purchased
a nice motorcycle with it two years ago. My rate went from 7.99% up to 21.99%.
No late payments to them or anybody else.
I called them up on the phone and got a 15-minute interview with a
supervisor. After reviewing my credit history (Yes, I have a secure job, and I own
my house and land; No, I have never filed bankruptcy or had a repo etc.), they
finally returned my APR to 7.99% but reduced my available credit to just above
my balance. I guess, in the future, available credit will be hard to get. I did
carry about $75,000 of available credit but that is dropping by the Credit card
companies.
Gerald
Gerald,
You're welcome! I'm thrilled to hear that the information you receive from me
has helped keep your rates low!
You are not alone. Banks are reducing credit lines across the board with
impunity. I believe they are cutting off their noses because people like you are
good, profitable, customers. By reducing your limits, they reduce their profits.
Basically, the entire banking industry messed up, top to bottom, begged for a
bailout, and will now punish good consumers like you. And it's your tax dollars
that are saving them!
Your assertiveness paid off big time when you called BoA AmEx. Getting the rate
back to 7.99% from 21.99% saved you thousands, no doubt. That's what everyone
needs to do anytime their banks raise rates or charge fees. Your success is the
perfect example of how to get results.
The questions is: Why did they raise your rate? My cynical answer is that
they just want to extract more cash from your pockets--and that is certainly
true to a large extent. However, another, and the greater, probability is that your
rate
increased because of changes in your credit score. You should consider getting
a tracking service so you know exactly how your score is affected by changes in
your activity. I use
MyFico to keep tabs on what's happening with my score.
You may be thinking, "I haven't been late. What could happen to my score?"
The answer is that your score could be dropping because banks are closing
your inactive credit lines. Also, they are reducing your existing credit lines.
Both of those actions reduce your overall available credit which increases your
credit usage ratio, the amount you owe vs. your total credit lines. And that can
reduce your credit score.
Any drop in your credit score can trigger an increase in your rates.
Sometimes even the smallest thing can lower your credit score. For example,
recently I received an alert from
MyFico that my credit score dropped 13 points!
I logged in to find out why. The reason is because my balance went up $11. It
was $11 on a credit card that had a $0 balance, so it was considered debt on
"multiple lines of credit." Come on--it's 11 bucks. That's case-in-point that
you can never know exactly how your credit score will be affected by one
specific strategy.
Well, I've since paid back the $11 bucks to see what would happen.
With that,
plus other minor changes, my credit score hit an all-time personal high of
836! I'm sure it won't stay there long, but while it's there, I will be taking
advantage of any 0% offers that come my way.
Congratulations again for your success with your finances, and keep up the good
work!
Best,
Scott
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