Thinking of Asking Credit Card Company to stop charging interest

[crashbb]

How is paying off the debt "walking away from it"? I am asking them to stop the interest for a while so we can get the balance paid down. If they want to cancel the cards, so be it. That way we can't use them and add more to the balance. And the terms are not the same as when we first opened the accounts. I think the interest rate on some of these was like 10 or 11% and now it's almost 30% on some of them! The credit card companies are greedy.

But did the credit card company change the interest rate after you made a purchase (for that purchase, I mean)? Unless, they did, you knew the terms when you made a given purchase (and knew whether or not you had funds for said purchase). To blame the credit companies greed for your current problem is disingenuous.

I do agree that credit cards charging 30% is greedy, but you knew the interest rate when you made the purchase (at least, that is how it works with my credit card - any change in interest rates only pertains to purchases made after the new rates are announced).

 

[DisMN]

Look at like this...

The CC is in the business of making money just like a jewelry store...

CC's make money by loaning money and getting paid interest...

Jewelry stores make money by selling rings for what they paid for them plus a mark up...

Would you think it was fair to the jewelry store if you bought a ring from them and then after you took the ring explained to them that you were only going to pay them the cost of the ring and not the mark up? That is in essence what you are doing.

The CC could have loaned out that money to someone else and gotten interest on it... they loaned it to you and you have a moral responsibility to pay it back... maybe it is costing you more than you realized... But they didn't raise the interest for no reason... maybe you got a special deal where the interest was very low for a set period, and then jumped up... maybe you missed a payment and that triggered a higher rate... in the end the increase was not out of the blue and shouldn't have been a surprise.

And this is exactly why we have been willing to happily pay back our debt with reasonable interest, NOT the usury rates they began to charge us.
If able to do so I'd bet most people would pay the debts back at the original rates they initiated that debt with.

IMHO 30%++ interest rates are criminal.

 

[JKMJ441724]

Look at like this...

The CC is in the business of making money just like a jewelry store...

CC's make money by loaning money and getting paid interest...

Jewelry stores make money by selling rings for what they paid for them plus a mark up...

Would you think it was fair to the jewelry store if you bought a ring from them and then after you took the ring explained to them that you were only going to pay them the cost of the ring and not the mark up? That is in essence what you are doing.

The CC could have loaned out that money to someone else and gotten interest on it... they loaned it to you and you have a moral responsibility to pay it back... maybe it is costing you more than you realized... But they didn't raise the interest for no reason... maybe you got a special deal where the interest was very low for a set period, and then jumped up... maybe you missed a payment and that triggered a higher rate... in the end the increase was not out of the blue and shouldn't have been a surprise.

I just bought $40,000 worth of furniture. The "list price" of the furniture was upward of 65K. I walked in there and told them this was the furniture I wanted and I wasn't going to pay 65K. We all know they mark it up just so they can mark it down. We negotiated and both walked away happy.

The scenario with the credit card is no different. I've had credit cards where the interest rate would sneak up from time to time. I called the credit card company and told them that I would not pay that interest and if they wanted to keep me as a customer that they would have to lower it. If they lowered the rate, I kept the card. If they refused, I closed the account right then. They changed the terms after she took the card (which is their right), she has the right to call them and try to negotiate additional terms, too.

Plus, not only does the CC company make money off the interest the consumer pays, the CC company charges the merchant a fee as well. It usually runs about 3 1/2% of the transaction amount. So even when you pay your bill in full each month, the CC company is making money - lots of it.

Credit card companies negotiate all the time. If they don't, they know they could be facing a debtor who has no option but bankruptcy and they don't want any part of that. It's in their best interest to keep a paying customer PAYING - even if it's at a reduced interest rate!

 

[RachaelA]

And this is exactly why we have been willing to happily pay back our debt with reasonable interest, NOT the usury rates they began to charge us.
If able to do so I'd bet most people would pay the debts back at the original rates they initiated that debt with.

IMHO 30%++ interest rates are criminal.

But if the interest rates are legal and you signed the terms and services agreement, then you are responsible. (I don't know the laws about how high companies are legally allowed to raise rates).

If you didn't agree with the terms, you shouldn't have signed up for and used the card.

 

[ilovemk76]

How is paying off the debt "walking away from it"? I am asking them to stop the interest for a while so we can get the balance paid down. If they want to cancel the cards, so be it. That way we can't use them and add more to the balance. And the terms are not the same as when we first opened the accounts. I think the interest rate on some of these was like 10 or 11% and now it's almost 30% on some of them! The credit card companies are greedy.

Something caused it to jump. None of our cards are over 15%.

A better way is to try the snowball way of DR, note I am not his follower, andget them paid off. Also a second job for you and your DH should be something to consider.

How is stopping interest their problem. You over extended yourself with CC debt. I will applaud you for not doing what that other infamous BBer did and just ran the cards up, stopped paying and then settled for pennies on the dollar.

 

[tar heel]

I doubt the OP will have any luck, but she certainly isn't the first person to be screwed by the credit card companies. I'm sure they followed all the rules about notification, but, if she already had a balance, she may not have felt she had an option. Also, many card companies raised rates on balances, not new purchases, right before the new rules went into effect.

There were a lot of DIS threads about what credit card companies were doing in advance of the new rules. Several were raising rates across the board without regard to what kind of customer someone had been. Target, for example, did that.

 

[DisMN]

But if the interest rates are legal and you signed the terms and services agreement, then you are responsible. (I don't know the laws about how high companies are legally allowed to raise rates).

If you didn't agree with the terms, you shouldn't have signed up for and used the card.

I signed up with an interest rate of just a little over 6%, with balance transfers at 3% until those were paid off. They decided to raise my interest rate to 28% on this debt and they did this to many other people as well. Due to class action suits the company did some backpedaling and went back to our original agreements.
The credit card companies are jerks.

I think there used to be usury laws but not any more as far as I know.

 

[joybeth]

Wow-wee sure are a lot of people making judgement about op who is simply asking for some ideas on getting out of a bad situation that she got herself into!

Anyway.....I would go through a credit counceling agency. Most are non-profit. Check with your local better business bureau before signing with one. Family member of mine did this when they turned to cc's after a lay-off and then couldn't make a dent on the balance because of the high interest rate. They make one payment to the debt management company (lower than when they were just paying minimums). The CC companies agreed to interest rates from 6-10 percent. Debt will be gone in 2 years. Their credit score has gone up considerably since starting the program because the balances are going down.

Good Luck!

 

[Free4Life11]

And in typical Budget Board fashion, we have a lot of high horses giving their "two cents" and very little practical advise. Anyway...

People who are carrying credit card balances have always been (and always will be) encouraged to ASK their creditors to lower their rate. It just makes financial sense. OP go ahead and call/send the letter. I think it's unlikely they would give you 0% interest, but they may very likely lower your rate. There is no harm in asking. You may also want to look into credit counseling as they can help out work out more favorable payment arrangements: http://www.nfcc.org/

Did you miss payments or go over your credit limit? Those are the reasons CC companies increase interest rates.

Those are some of the reasons...a few years ago I know myself (and millions of other customers) had their rates increased due to NO fault of our own.

But if the interest rates are legal and you signed the terms and services agreement, then you are responsible. (I don't know the laws about how high companies are legally allowed to raise rates).

If you didn't agree with the terms, you shouldn't have signed up for and used the card.

Thanks for the lecture! Now where do the terms say you cannot ask the creditor for a voluntary interest reduction?

 

[JKMJ441724]

Those are some of the reasons...a few years ago I know myself (and millions of other customers) had their rates increased due to NO fault of our own.

AND ... just because something is a business and/or legal does not make it ethical. If every business was ethical we would not need the consumer protection act. (huh, just reading that statement made me laugh - but not enough to delete it!!! If it's in violation of the consumer protection act, by default it IS illegal).

At any given time, there are a number of bait and switch operations going on. I'm sure some of those are done at the hands of CC companies. I'm not saying this happened to OP, but it can be one explanation.

 

[carebee21]

Wow-wee sure are a lot of people making judgement about op who is simply asking for some ideas on getting out of a bad situation that she got herself into!

People are getting sick and tired of having their banks charge them more money in fees, more money in credit card interest rates that they actually pay, reducing their credit card points programs or paying less interest on their savings because people don't pay back the debt that they created under the terms that they agreed to. When that happens, they have to make money somewhere, so it unfortunately comes back to people who are responsible and actually pay their bills.

And people might be making assumptions, but its clear she's trying to take the easy way out of paying for her debt. If you read through her past history, you'll see she just bought bath and body works products yesterday (is that a neccesity?), they just went to a water park 2 weeks ago (is that a neccessity?), she wants to buy an ipod touch, her kids play in baseball and softball that, as she says is "a whole lot of money" and on and on. Maybe she should do the responsible thing and budget her money for what she can afford, not what she wants! It might suck to not have anything extra for awhile, but oh well. That's the responsible thing to do.

And to the OP: I can't believe you have the gall to say the credit card companies are greedy. You're the one who agreed to their terms. You're the one who spent their money. You're the one who got yourself into this situation. You're the one who couldn't live within your budget. No one held a gun to your head and told you to keep charging on your cards. You're the one who got the credit card statements every month and could see just how much you owed. Time to look in the mirror and take responsibility for YOUR actions and stop blaming everyone else, including the credit card companies.

 

[hsmamato2]

I think Op might have touched a hot button here on the budget board...and some of the replies have been b/c of phrases like "credit card companies are greedy" and " they can stop the cards so we can't add more to our bills".... OP, I say this sincerely.....if you get the interest stopped,good luck. I highly doubt it,but unless you decide that you WILL STOP CHARGING and adding to your debt,it won't matter.
As long as you even think of charging any more to a debt you will not be paying off anytime soon,then the interest charges are not the primary issue. That is what some pp's are trying to get across,I think. interest charges stink,but if you have created this debt,then the interest isn't going to change things for you.
(I understand,circumstances,whatever, it may or may not be a reason for the bills,that's not my point )
So....consider carefully why you want to stop charging,and then do it,if you can.
and then pay off those debts,consolidating and lowering your rate if possible. but the key is stopping,and not starting again,not your rates.

 

[seashoreCM]

The only way to really force the issue is to threaten to declare bankruptcy.

Yes you should try to negotiate individually with creditors first.

In deciding whether to discuss bankruptcy you should project your expenses several years into the future. If that suggests you will be getting deeper and deeper in the hole it is a good idea to get the bankruptcy process going sooner rather than later.

 

[RachaelA]

\

Thanks for the lecture! Now where do the terms say you cannot ask the creditor for a voluntary interest reduction?

No where in my post did I say they couldn't ask for a reduction.

I said that they are responsible for the debt (original amount plus interest legal under law). Plus there is a huge difference from wanting to go back to your original interest rate of say 6% then wanting 0% until you pay it off.

 

[JKMJ441724]

Credit card companies routinely target people with lower credit scores precisely to get them to pay the minimum payment each month in perpetuity. That way CC companies make TONS of money. Read it again - CC companies TARGET people who they KNOW can't make more than the minimum payments.

For example, if the minimum payment is 2% of your actual balance and you charge NO MORE purchases, you could assume it would take 50 months to pay it off (2%x50 months = 100%). But it's not true, by the time you add the interest, it could take about 300 months to pay off a balance. They've collected 10% or more for longer than most people take out a mortgage.

They also have language so that if you are late on a DIFFERENT credit card, they can raise your rate on this one, where you've made perfect payments.

They LURE college kids over to their sign-up desks by offering freebies - no they can no longer REQUIRE them to apply for the card to get the free item, but many students do and the CC company knows this.

They also ALLOW consumers to OPT-IN for allowing over-the-limit purchases so that the CC company can then charge the consumer additional fees. If someone is at their credit limit, WHY OH WHY would CC company allow the charge to go through? Because allowing the consumer to purchase more than they can afford (the credit card company already determined the consumer's spending limit based on their credit report) MAKES the credit card company even more money.

Someone posted that credit card companies are businesses and they want to make money. That is really, really true.

But I stand by my statement that sometimes their practices are less than ethical. It's because of these unethical practices that the federal government has legistated such sweeping credit card reform. And because of this reform, credit card companies are looking for other creative ways to make this money.

 

[Derby4me]

I don't have a suggestion, but just wanted to give some encouragement. It sounds like you're in a little over your head, but you're taking the first step...the MOST important step. Good luck and don't be discouraged. Keep your head held high and do what is right for your family.

As a person who pays off her credit card each month, I'm not offended that you're asking for a lower rate on yours. Sending good thoughts and prayers for wisdom your way.

 

[carebee21]

Credit card companies routinely target people with lower credit scores precisely to get them to pay the minimum payment each month in perpetuity. That way they make TONS of money. Read it again - they TARGET people who they KNOW can't make more than the minimum payments.

For example, if the minimum payment is 2% of your actual balance and you charge NO MORE purchases, you could assume it would take 50 months to pay it off (2%x50 months = 100%). But it's not true, by the time you add the interest, it could take about 300 months to pay off a balance. They've collected 10% or more for longer than most people ake out a mortgage.

But that's the terms and conditions that you signed up for and agreed to. It's the credit card companies fault that you didn't read and/or understand the agreement? And I don't think any reasonable person would assume this math: (2%x50 months = 100%). You NEVER get something for nothing. Why would someone think that the credit card company is just going to loan them money for free????

They also have language so that if you are late on a DIFFERENT credit card, they can raise your rate on this one, where you've made perfect payments.

They LURE college kids over to their sign-up desks by offering freebies - no they can no longer REQUIRE them to apply for the card to get the free item, but many students do and the CC company knows this.
But once the college student signs up and gets their free item, they don't HAVE to use the card.

They also ALLOW consumers to OPT-IN for allowing over-the-limit purchases so that the CC company can then charge the consumer additional fees. If someone is at their credit limit, WHY OH WHY would CC company allow the charge to go through? Because allowing the consumer to purchase more than they can afford (the credit card company already determined the consumer's spending limit based on their credit report) MAKES the credit card company even more money.

That's a 2 way street. The individual can just as easily opt-out and they won't be allowed to go over their credit limit. I don't understand why anyone would opt-in and set themselves up for the possible fees, but it's not like the credit card companies don't disclose the fee. People make the decision to do so. That's their problem, not the credit card companies.
Someone posted that credit card companies are businesses and they want to make money. That is really, really true.

But I stand by my statement that sometimes their practices are less than ethical.

The part in blue above are my responses. And when I say You, I don't mean you specifically, I just mean you as in the credit card user.

But ultimately it's your responsibility to say No, I can't afford this. No, I don't need this. No, if i don't have the cash for this then I'll wait.

Just because a credit card company gives you the credit line doesn't mean you have to use it or charge it up to the point that you can't afford to pay it down.

If you take 2 people who earn the same amount of money, with the same credit score, you can have 2 completely different financial situations based on how they spend/save their discretionary cash. It's not the credit card companies responsibility to babysit people and determine who's reasonably using the cards and who's being irresponsible. It's the individuals responsibility.

Personally, I enjoy living in a country where we're semi free to do what we want, with as little government interferences as possible. I fear that if people keep dodging their personal responsibility and try to blame everyone and everything else for everything they're doing wrong, we're going to have the gov't placing restrictions, rules and laws on everything. There would be no need for any credit laws if people were responsible. If the terms were sky high and didn't seem right, then people shouldn't be using that card or company. But because idiots did and then turned around and blamed the companies instead of themselves, we've now got laws that limit interest rates, fees, etc.

 

[canadianjovigirl]

You may want to talk to your bank about a consolidation loan which would have a reasonable interest rate. About 5 years ago we had a bunch of credit card debit and then with job changes etc we were just paying the minimum amount due and getting now where and could see no end in sight. We talked to the bank and got a loan with less than 5% interest for 2 years and had the debt paid off for good and our monthly payments were even less than what our minimums to the credit card companies were. It did not seem to hurt our credit as we did use the cards once or twice after they were paid off and then cancelled them like our bank recommended. We now only keep one credit card for travel, on line stuff etc and now choose not to carry credit card debt and save for what we need or think twice before spending the money in savings.

 

[JKMJ441724]

But ultimately it's your responsibility to say No, I can't afford this. No, I don't need this. No, if i don't have the cash for this then I'll wait.

I agree completely. I'm one of those people. I can't tell you WHEN the last time I paid interest on one of my cards. I use my credit card simply because they give me incentives to do so. But CC have some policies in place to specifically target people who are less than responsible. Because these are the people who make them the most money - these are the ones they can charge high interest rates, late fees, over-the-limit fees, etc. I'm not commenting on OP responsibility level, just commenting on practices of some CC companies.

Just because a credit card company gives you the credit line doesn't mean you have to use it or charge it up to the point that you can't afford to pay it down.

Again, I agree. But sometimes "life happens" and you end up getting into a situation that you didn't expect, hence the reason most of us even carry credit cards. My A/C unit went out a couple of weeks ago and it cost me 6K to get it fixed. I was able to get a 0% interest cc (with rewards so I'll make $200 on the deal) and I will be able to pay it off in 3 months. But a lot of people can't do this. So do they sit in the baking sun all summer with their two small children or do they put it on a credit card? I applaud someone who makes an effort to live up to their obligation to pay back the debt rather than resort to bankruptcy. I have no problem with someone negotiating terms to STAY in the good graces of the credit card company. Asking for help not a BAD thing. Even if the CC company reduces the interest rate to 0%, they've made money from the consumer's purchases by the fees they've charged the merchants.

If you take 2 people who earn the same amount of money, with the same credit score, you can have 2 completely different financial situations based on how they spend/save their discretionary cash. It's not the credit card companies responsibility to babysit people and determine who's reasonably using the cards and who's being irresponsible. It's the individuals responsibility.

I don't think anyone is asking for a babysitter. Interest/fees can create the hardship just as much as spending practices. there is a difference in finding yourself in a predicament of your own creation and drowning because of someone else's targeting practices.

 

[brunette8706]

If you pay the credit card balance in full every month, then they are not charging you any interest are they? My mother does this. She charges things when she shops so she doesn't need to carry cash and then when the bill comes she pays it off - they don't get any interest from her at all.

*
I pay off my card most of the time in full. There has been times it took me to pay it off for 2 billing periods. For BIGGER purchases i.e. flat screen tv's I go to WALMART and do the 12 month interest free, even SAMS club has 1 year interest free (purchased furniture), and Macys (2 year interest free on furniture). I would not charge up in excess if I could not make the payments.