It started in April. In April, I received a notice that the APR on my credit card was jumping from 7.15% to 15.24%. This particular credit card of mine was my only credit card, though I also have a personal line of credit. The balance is particularly high (though it has never exceeded my limit). It’s particularly high because of expenses incurred during school, including putting some incredibly major educational purchases on it that would have otherwise forced me to drop out of school. It doesn’t matter - the point is that I had an impressively high balance on it. But, the bank and I agreed that I could borrow that much money. That is what matters to me.
I opened an account with US Bank in 2003 when I was preparing to move to Cincinnati. Two accounts, actually, one for myself and one for my mom. We figured it would be smart, because we could transfer money back and forth to one another easily, which comes in handy when you’re 600 miles away. When my soon-to-be husband and I were living together and starting to combine our finances, we just got another account with them, for the same transferring purposes. They offered me a credit card that was at a significantly better APR than the one I had with Chase, so I transferred my (at the time, relatively low) balance over to them and combined all my finances into one bank. And when I was going to have to drop out of college because my financial aid was maxed out, well, we took out a line of credit that I had to put a couple quarters of school on. The interest rates were low. It all made sense.
And then, it’s April of 2009, and they spike my interest rate on my credit card. I had been paying around $100 more than my regular monthly payment, in an attempt to get ahead on my balance. Barely used the thing anymore - basically only when I messed up and forgot my debit card at home or something similar. The interest rate spiked and my new minimum monthly payment is $330, which means that additional $100 I had been affording was now going to be interest-only.
After weighing the options, I decided to opt out of the rate increase, which means closing the card. I knew it was going to negatively impact my credit, but after doing the math, I was going to be spending about $8000 more over the next four years in interest to pay off the balance that the bank and I agreed I would borrow at 7.15%. At 24 years old, when you’re already handling five years of student loans, you don’t agree to pay $8000 more just for the security of having a credit card. I couldn’t afford their new terms, so I closed the card and we agreed that I would pay off the balance at my previously established APR. I was worried about the hit to my credit, but I still had a great personal line of credit, so things would still work out.
Great. So, as one might have predicted, the next month I receive my statement on my line of credit, and they’ve dropped my limit over $5,000 - incidentally, barely $100 over the current balance on the credit line, which skewed my ratio of debt to available credit off the charts. Now I had no available credit, and couldn’t apply for more with another bank because of how awful my credit looked. Note that at this point, I have not used any more credit. I’m not living beyond my means. This is all punishment I’m receiving as a result of refusing to allow my APR to be doubled on my credit card. Maybe I could have seen this coming, but I certainly didn’t.
And here we are in November. I continue to pay off my balances, with payments well above my minimum, and every single month my credit line is reviewed and decreased to $100-200 over my limit. My credit can’t improve, whatsoever, despite my regular, above-minimum payments. Phone calls explaining my situation have not helped. I realize that in 2009 we’re still experiencing a financial crisis, but I have difficulty understanding how eliminating customer loyalty is the best way to pull you out of it.
Perhaps the most infuriating part is that I am receiving multiple letters every week offering me new US Bank Platinum Visa cards. I know there are different divisions in banking - I worked in pre-foreclosure for awhile in college and we had no ability to speak to anyone else in the company, which simply infuriated our customers that also had bank accounts in addition to the mortgages that they held with us. But really? You more than double my APR, ostensibly forcing me into closing my account, which wrecks my credit and gives you carte blanche to destroy a completely separate account with you, and now you’d like me to open a new account? Where’s the incentive for me to be loyal to your company?
I make a good deal of money for someone my age, and have saved 30% of this year’s income since I’m a freelancer and know that I’ll be owing money in taxes. I’m more than financially stable and have everything in check. And yet, I can’t qualify for a credit card with a new bank to save my life. Six months ago, I had mid-700s credit and was a financer’s dream, and now, based on wanting to save money and not let a bank bully me into their terms that directly contradicted an agreement we already made, I’m a high-risk customer. All without borrowing another dime from anyone and paying more than ever to get my debt in check.
Thanks, financial crisis. I owe you one. And you’d better be damned sure that as soon as those balances are low enough that a company that actually deserves my money will take them, I’ll be shifting my financial future elsewhere.
