Bad Credit Online Magazine - Daily News and Advice on Credit, Debt and Mortgage : Credit card issuers hike interest rates when they sense bad credit

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August 13, 2005

Credit card issuers hike interest rates when they sense bad credit

According to Billings Gazette, big brother is constantly watching you. More precisely, credit card issuers are monitoring your credit report looking for every reason to raise your interest rate.

Basically, banks and credit card companies love to see you at the point, when even 20 - 25% interest rate won't force you to leave them. Why? Because at that point you wouldn't be able to get credit at a lower rate or at any rate. So if they see you missed your car payment or you carry high balance or even better, few high balances, they can take you with bare hands.

The annual rates can supposedly go to 35%. And because they are retroactive, meaning new rates can be applied to past balances, even if you have $10,000 at 6% today, you may be paying 15% tomorrow.

Here are two quotes from consumer groups:

"One seemingly small mistake - that most people don't think of as anything - can have ramifications far beyond what seems legal to most people," said Linda Sherry, Consumer Action's national priorities director. "But it is legal."

Notes Ed Mierzwinski, consumer director for the U.S. Public Interest Research Group, "The law allows credit card companies to change your rates and terms at any time, for any reason."

 
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