and NO it is not illegal

[bankworking]

Frankly, I have no clue what the legal limit is on how long a bank has to warn you before upping your credit card rate. I don't know because when we change our credit card rates, we grandfather in all of the existing ones, so the change only applies to new cards (and we stop giving increases on the no-longer-offered cards).

But I do guarantee you that when YOU request an increase to your limit and we say "We have approved your credit card for an increase, however our rates are based directly off of your current credit score. Since your credit score has gone down, if you accept the increase, the rate on the card will change to the new [higher] rate that goes with your current credit score.", if you then accept the increase, then then the fully-disclosed rate increase is NOT illegal.

You can choose to NOT accept the increase, at which point your rate will not change. So NO, this is not an illegal change of your rate. It is giving you a choice.

And despite the multiple notes on the increase that stated the rate increase was fully explained to you, I am perfectly willing and able to reverse the increase and take you back to your former limit. Oh? You want both the higher limit AND the increase. I want customers who don't yell at me over things they already agreed to. Looks like we'll both have to learn to live with disappointment.


As for the whole "well, why did you approve the increase if my credit is worse now" complaint:
1) would your rather we denied you?
2) approvals are based partly on history with us. When you got the card to begin with, you had no history with us. Now, you have some history, so we're willing to risk a higher limit.
3) screw it, I'm done trying to explain anything to you

[MoonCat]

They should not be yelling and ranting. That kind of rudeness is never acceptable.

I have to say the idea of raising a credit limit when the person's credit score has gone down puzzles me, too. But OTOH you did explain it to him. He just wants to be upset.

[ADeMartino]

I have to say the idea of raising a credit limit when the person's credit score has gone down puzzles me, too. But OTOH you did explain it to him. He just wants to be upset.

It's to induce revenue via fees and higher interest rates. If your credit score drops, you're more likely to resort to 'minimum' or 'interest-only' payments, or even be late with payments. Furthermore, if you previously had a good credit score and it drops, you're more likely to lean on the credit card for everyday purchases and rack up a fat balance (and accompanying interest!).

The interest and fees are what make credit card debt so crippling - and the bankers so rich.

[mathnerd]

It's to induce revenue via fees and higher interest rates. If your credit score drops, you're more likely to resort to 'minimum' or 'interest-only' payments, or even be late with payments. Furthermore, if you previously had a good credit score and it drops, you're more likely to lean on the credit card for everyday purchases and rack up a fat balance (and accompanying interest!).

The interest and fees are what make credit card debt so crippling - and the bankers so rich.

Not necessarily. As Bankworking mentioned, there's all kinds of factors that go into what limits and rates are offered. At it's simplest, a higher unsecured line of credit is a higher risk and therefore incurs a higher rate. Add to that a slightly reduced credit rating that's still within acceptable ranges, a higher rate isn't necessarily uncalled for.

As for disclosure, when I worked in loans and lines/underwriting for MajorBank, every three months we'd go through rounds of upset customers over a similar issue. We'd send out notices saying we'd reviewed the account and we'd decided that based on the current customer profile (which could include history with the bank itself and outside creditors), we were raising the rate to x%, and if they weren't happy with it we could freeze the account and they could pay it off at the current rate, but failure to notify us of your intent to do so means that you accept the new rate. We also took other actions including closing accounts and whatnot. Anyway, every time we did a wave of accounts we'd get the complaints. Or, sometime later a customer would notice the higher rate and complain. Thankfully we had an image database where we could pull images of every single mailing/letter/document associated with the accounts, so we would happily email the banker copies and, in not so many words, say "sorry, not our fault you can't be bothered to read your mail.".

Granted, INAL, but I believe that the law requires that creditors give 30 days notice of a change like that and an opportunity for the customer take a negating action (like putting the account into payoff mode). So Bankworking's customer being given the chance to either accept or not accept the new terms is perfectly acceptable.

[bankworking]

As for disclosure, when I worked in loans and lines/underwriting for MajorBank, every three months we'd go through rounds of upset customers over a similar issue. We'd send out notices saying we'd reviewed the account and we'd decided that based on the current customer profile (which could include history with the bank itself and outside creditors), we were raising the rate to x%, and if they weren't happy with it we could freeze the account and they could pay it off at the current rate, but failure to notify us of your intent to do so means that you accept the new rate. We also took other actions including closing accounts and whatnot. Anyway, every time we did a wave of accounts we'd get the complaints. Or, sometime later a customer would notice the higher rate and complain. Thankfully we had an image database where we could pull images of every single mailing/letter/document associated with the accounts, so we would happily email the banker copies and, in not so many words, say "sorry, not our fault you can't be bothered to read your mail.".

That's the type of thing I hear happens at a lot of banks. We seem to be rather unique that once we give someone 'X' rate for 'X' limit, we don't change the rate unless they are requesting a higher limit AND accept the higher limit. Saves us a lot of headaches from the sorts of calls you're talking about.

Though really, we will effectively raise rates eventually, because now-a-days every credit card that I know of (that isn't grandfathered in) with a rate under 15% APR is now based on the VARIABLE Prime rate + X. We won't change the '+ X' part of the rate without a limit increase, but one day the Fed is going to raise the prime rate, and then every credit card company will be filled with complaints from people who didn't realize what variable means or that they've already received the only warning they are going to get from us about rates changing when prime does.

[mathnerd]

When we did random reviews like that those actions were punitive. If a customer asked to have their limit raised, it would have worked similar to what you described. The limit/rate offered would be based on their current profile. I actually saw it happen more than once where a customer had improved their credit rating since the line or card was new and even though we were raising their limit, the rate offered actually went down. It does go both way.