Have you recently received a “Change in Terms Notification” from your credit card provider? Did you happen to open the letter and actually read the information? If you did, you were probably as shocked as I was to read that they were changing the “Penalty APR” on my account to 29.99% APR… almost 30% APR. The first thing that came to mind was “that must be a typo,” the next was “no way,” and then “NO WAY!”
The Penalty APR is a punishment for people who pay their credit card bill late. As an example, Citi Bank discloses that the Penalty APR applies if your payment is late or returned. How long does it last? The Citi Bank disclosure states, “If your APRs are increased for either reason, the Penalty APR will no longer apply to existing balances on your account if you make six consecutive minimum payments when due. However, the Penalty APR may apply to new transactions indefinitely.” INDEFINITELY!!
Okay, paying bills late is not a good thing, but do credit card providers really need to charge almost 30% to make their point? Shouldn’t the penalty fit the crime? A solid, reliable customer whose payment is one day late after 10 years of on-time payments is much different than one who is frequently late and delinquent. And I know… this only affects people who make their payments late – but heck, we’re all human and things happen.
So, I hope you’ll do what I did if you receive a “Change in Terms Notification” – cut your credit card into tiny pieces, write a letter telling the credit card company to close your account and then look for a credit card that has a reasonable rate and fees. You could always check out a credit union.
numericacu
Numerica Credit Union
