Even Personal Finance Writers Make Mistakes
I recently opened the monthly statement for my MasterCard.
When I read it, I gasped. No, not because my balance was ridiculously high. I actually had a zero balance on this particular statement.
What surprised me was my annual percentage rate for purchases. The last time I checked, it had been 15.24 percent. Now, it was 25.24 percent.
As a personal finance writer, I often get calls and e-mails from people who have had their interest rates raised, inexplicable fees assessed or credit lines suddenly cut. This has been happening with a lot more frequency in recent months, and card companies say it's because the cost of lending has increased.
Consumers are angry that banks that have received federal bailout money are doing this. The White House has taken notice and met with the heads of the major credit card companies yesterday. The House, meanwhile, will vote on a bill next week that will codify new rules that the Federal Reserve approved last December prohibiting what it called “unfair and deceptive practices” such as arbitrarily increasing rates on existing balances.
As a personal finance writer, I’ve been writing about all this, which made my interest rate hike ironic.
I am not, however, completely innocent here. For the last year, I have worked hard to get my finances under control. I have gotten much better at it. But in February, I screwed up with this credit card. Usually, I get online before the due date and schedule a payment. This time, I scheduled it two days after the due date. I was busily getting ready for a trip to the Middle East and juggling work with writing a book. I should have paid closer attention.
It didn’t matter that it was my first late payment on this card. It didn’t matter that the payment I sent in covered the entire balance. I still got whacked.
But why was I not notified of this change? Why did I have to find out by looking at my statement?
When I called my card company this week to find out, I was transferred from the customer service representative to a rate specialist.
“It was based on the higher cost of doing business due to the challenging economic environment,” she said.
She told me a letter notifying me of this change was sent out on Feb. 11. I told her I had never seen this letter. I left for the Middle East in the last week of February. The letter did not arrive by then. I was gone for about six weeks. When I returned, I went through my mail. I never saw such a letter. I went through all my mail again this week just to make sure. Still no letter.
At this point my cell phone cut us off (I will refrain from cursing my cell phone company here). I called back and was once again transferred to a rate specialist named Sonya. I re-told my story to Sonya. She had a different explanation for me. My two-day late payment triggered a default rate, she said. It could have gone up as high as 29.99 percent. I guess she told me that to make me feel better.
“But I’ve always paid on time. I was late once,” I said.
“One-time only,” she said. “It’s automatic. It’s under a default.”
Again, she mentioned this Feb. 11 letter. “Well what did it say?” I asked.
It notified me of the rate change, she said, and gave me until March 10 to opt out. If I had opted out by then, my account would have been closed and I would have been able to pay off my debt under the old rate. She offered to re-send the letter to me, as if that would do me any good. By March 10, I was in Beirut with no access to my mail. How was I supposed to opt out?
We kept going back and forth with no resolution. In the end, she told me to fax a letter asking for leniency.
Funny, I thought. One of the new rules approved by the Federal Reserve prohibits card companies from raising rates on existing balances unless the customer was 30 days late. That rule would have certainly helped me here, but it doesn’t go into effect until July 2010. On Wednesday, the House Financial Services Committee passed a bill that would, among other things, require credit card companies to give customers 45 days' notice before changing their rates. That provision won't go into effect until 90 days after President Obama signs it into law--if the bill passes the House and Senate and if he signs it into law. Again, that's of no use to me in this situation.
Okay, I realize I made a mistake by sending that payment in two days late. But given that I had been on time before and actually paid off my entire balance, did they really have to bump me up to a 25 percent default rate? I definitely plan to send a letter. Wish me luck.
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