It seems that Ann Minch of Red Bluff, Ca. has a problem with her bank - Bank of America. The Huffington Post (source) found her YouTube video declaring war on the bank. They have raised the interest rate on her credit card all the way to 30%. According to the article, she's made the minimum monthly payments for "several years" and never missed a payment. She even paid extra from time to time, sometimes $50, sometimes $100. And they raised her rates in reward for the loyalty.
So, Ann is getting even. She went down to her branch and closed her account and moved the money to local community banks. And now she's refusing to pay the balance on the card until they lower her rate. She's upset that the bank got a government bailout and now won't help her.
Well, I'm not sure she's following the right track (even though she has gotten her rate reduced). I'm not fan of BofA, but you have to admit they have ATMs everywhere. If Ann decides to use an ATM and her local community bank doesn't have one handy, she's likely to pay a $3 fee (or more) to get the money she moved. And refusing to pay a balance she legitimately owes can wind up trashing her credit report and causing her to owe more than she started with.
I did a little simple math to find out what her credit card has been costing her. According to the article, her current balance is $5,943.34. At her rate of 12.99%, that's about $772 in interest she's been paying every year. Wouldn't she be better off buying things with cash, instead of charging them? I'm sure she bought some stuff on sale, but did she save $772 each year on sales?
I was curious as I read this, what is my interest rate? See, I don't even know (or care). I pay off my balance each month and don't pay interest. Well, a couple of times in the last few years I have. I slipped up and made a late payment and was charged interest. Net fees & interest over the last 5 years has been under $200. I don't want to pass this off as minor, that's $200 that I could have used for something else. It's a penalty I've paid for my mistakes. Ann Minch's penalty is $772 a year. (turns out my rate is 7.9% for purchases - from Capital One).
5 comments:
Hmmm. I'm kind of conflicted. It seems nasty to raise the rate so high for apparently no good reason. However, card holders like this lady represent a huge risk to card companies in today's environment.
It used to be that they loved those minimum payment making customers because they'd never pay off the balance and it was easy interest money to the CC company. But now people who can't afford to pay off more of their debt are very scary.
I also have Capital One with your interest rate, but a couple months ago I received a letter saying effective April the rate will be something I can't remember (I'm thinking 17 or 19% maybe). I called and talked to them; I've been a customer for 12 years and usually pay the bill when it comes. When I buy books for our book table ministry (we give free Christian books at the Iowa City pedestrian mall) it's usually $1,000 to $1500 so that might take me three months to pay. But I will not stay with them in April. I have a local bank which has given me a VISA with 6.9%. Goodbye Capital One.
Actually the credit card companies would call you a "free loader" for paying off your debt monthly and thus not incurring interest penalties. I agree with your practice but they certainly do not.
Cameron, yes and this lady is actively deciding not to pay it off..
Glenn, it would be interesting to see if you can negotiate a different rate with Cap One...
Chuck, yep, I'm a freeloader. And I get rewards (free trips) too!
Well, I came across my info from Capital one and I see where I had a bad memory. I remember a year or so ago they were going to raise my interest to something like 10% from the 7.9% I had. To keep me, they gave me a 5.9% rate for a year and now it's at 8.9% In April it will be 17.9%. Cash advance is 24.9% (never in my life done a cash advance). They said they couldn't give me a better rate next year.
And I discovered my local bank VISA isn't 6.9% - it's 6.25%! So goodbye Capital One.
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