Credit card sneaks


It was inevitable, of course. I’ve enjoyed a 5.9% APR on my Fidelity MasterCard since I first got the thing about six years ago. When I called them a couple of years ago to ask them a question about the card, I made a point of telling the customer service representative that I really appreciated them maintaining that same low APR for so long, and he said something to the effect of, “Oh, as long as you keep paying on time and maintaining good credit, we won’t change the rate.”

Even back then, I knew that wasn’t necessarily true. You don’t have to read the fine print to know that APR’s are at the mercy of the issuing company, and that they could change them at any time. Every now and then, I would check the statements to see what the rate was, and each time I would smile and think, Good, they’re not changing it.
Well, that was a good ride while it lasted. I recently recieved one of those thick, official-looking envelopes in the mail from the company, and although I normally just glance over the contents to see if there was anything that required my immediate attention before tossing it in the shredder, this time I actually took the time to read the whole two-page document that accompanied the privacy manual and a couple of ad flyers.
In short my credit card company is now raising my APR as of June 1, 2009, to 11.99%. Still not a bad deal (my Wells Fargo VISA, which I only use once every few years, is a crazy 14.99%, and they refuse to lower it, even after I’ve asked and pointedly told them I would not use it until they do), but it’s still double what it has been. They also raised the APR on balance transfers and cash advances, as well as the late fees, although since I’m never late in my payment and I never do either transfers or cash advances, I didn’t pay attention to what the new terms are. And here’s the thing: the new rate applies to new purchases and existing balances.
Here’s the interesting part, though: The notice also offered the option to reject the new APR, with a caveat. In order to reject the new rate, I had to call this number or send them a written notice. In addition — and here’s the kicker — I can’t use the card anymore, whether for purchases or balance transfers or even those automatic payments for things like subscription services. The moment I do, the new APR kicks in, applying not only to the new purchase but to all existing balances.
B. and I weighed the options and decided to reject the APR. We’ll pay off the current balance and then decide whether or not we want to continue using the card. One of the things I really like about the card is that I’ve had it for a long time, and along with the Wells Fargo VISA (which I’ve had for six years), it gives me a good credit record. I pay on time, and a couple of times I’ve paid the full balance off. (The VISA hasn’t had a balance in a couple of years.) They’ve always been pretty decent, especially with the APR, although occasionally they’ll play that awful trick of changing the due date, sometimes by as much as a week. That’s one of the reasons why I never do automatic payments for anything, even for utility bills. I like to be able to control when I pay bills, and since I keep a close eye on our outstanding bills and pay them weekly, I’m never late.
Another reason we like the card, of course, is that it allows us to get things like rental cars and hotel reservations worry-free. The card does have a rewards program, and right now we’re expecting a $350 check from it, but it’s not as good as, say, the American Express or Discover cash back programs.
We’ll probably look into other cards with lower interest rates, but for now I think we’ll just pay off the card and then use it only for things like the aforementioned travel expenses, paying the balances as soon as they incur so that the rate doesn’t kick in at all. I don’t like having too many credit cards — I have two, the MC and the VISA, while B. has one — and I loathe applying for more. Still, it might be a good idea to start shopping around once we pay this one off.
If you have a credit card with a low rate, or even a not-so-low rate, make sure that you start monitoring any correspondence you receive in the mail or electronically from the card issuer. It may come in a formal letter like mine did, or it may be buried in fine print among many other documents they send you, but with the Obama administration considering legislation that will impose restrictions on the ability of lenders to amend credit card terms, you can bet that banks are going to be scrambling to make changes now, before any new laws take effect. Even if you’ve been paying on time for the entire life of the card, and even if you’ve rarely used the card, definitely keep an eye on it. You might be in for a big surprise.