There are Better Ways to Borrow than Credit Cards

About two months ago, a friend got a letter in the mail from the bank that issued his credit card. It said that they were raising his interest rate from 11.99% to 19%. He called them immediately and asked them why they were doing this. They told him over the phone that it was a misunderstanding. The notice was to tell him that his minimum payment would be raised, but his rate would stay at 11.99%.

Last week he got his credit card bill, and the interest rate was over 19%. Rather than start a fight with them, he paid off the whole bill with part of a home equity line of credit that he had opened at the very same bank! His new interest rate will be based on prime, and is currently 6.5%.

Had the bank left the interest at 11.99%, my friend might not have bothered to switch to the home equity line, so the bank lost the extra interest, and made an enemy of their own customer in the bargain.

I wrote a simple Guide to Stopping Automatic Payments on my website

You must be logged in to post a comment.