Bank might make you ask for a higher credit card interest rate

We had an interesting email from a reader of this BLOG whose bank was making it necessary for them to ask for a higher interest rate.  This may seem impossible, but here’s how they did it:

The credit card holder had a large balance on the account and was making the minimum payment, 2% of the monthly balance.  (So, if the balance on the card was $10,000 the minimum monthly payment would be $200.)  The bank wrote them a letter and said that they felt the risk on this account did not meet the bank’s new risk standards, so they would be raising the minimum monthly payment to 5% of the outstanding balance, more than doubling it.

When the card holder said they could not afford a monthly payment that high the bank said, oh, not to worry, they could lower the monthly payment by signing up for a plan with a higher interest rate!  The less they wanted to pay per month, the higher the rate.

A diabolical way to get you to raise your own credit card interest rate, I’d say.  There is not much you can do about it, except to be careful not to let your balance get so high that you are forced to pay the minimum monthly amount.  Not only does that leave you vulnerable to this kind of dirty trick, it will result in huge total interest payments over long periods of time.

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