     Phil | Thursday, January 13, 2000 - 04:25 am 
I just received a letter from Discover that I
would like to share with you.
"Unfortunately, due to rising interest rates, we need to to increase the APR for purchases on
your account, as well as other accounts with
credit profiles similar to yours, as described
below.
Effective February 01, 2000, your APR for
purchases will be increased from 12.99 to 16.99.
If you do not agree with this change you must
write to us by January 24, 2000. **ETC**
WE will close your account if you do not agree
with this and you may pay the balance under the
previous terms.
So if I don't agree my credit record will show
that a creditor closed an account. It doesn't
look like I have much choice accept to agree.
There is virtually no negative information
contained in my Trans Union credit file which
is what they based their decision on.
I do however have high balances on my cards. Three cards is all I have.
I don't understand these people. They want no
payment on a $1200.00 balance yet I am considered
a risk for having a high balance.
The only reason I ever considered a Discover
card was because they told me I qualified for
a silver card with a minimum $5,000.00 credit
line. They even offered my sister a card who
has NO credit file and who is on disability.
I did Discover and so shall they that they are
minus another customer.
Phil |
| Sean | Thursday, January 13, 2000 - 06:33 am
Just contact them yourself, tell them you don't agree to the rate change, and tell them you want to close the account. Keep a copy of the letter and, if it shows up as other than "Account Closed By Consumer's Request" send a copy of this letter to the credit reporting agencies. |
| Christine Baker | Thursday, January 13, 2000 - 02:39 pm
It's obvious that Discover raised Phil's rate because he has high balances. They figured he couldn't afford to cancel their account.
And of course, this is exactly how so MANY people end up in bankruptcy. The creditors DESERVE every dollar that's discharged. I just can't wait for the next depression (not kidding.)
I recommend to Phil to NOT close this account. Try not to carry a balance instead. Or just don't use it anymore.
Your credit score will be lowered, probably substantially, because your available credit will be much lower.
To get other cards you'll get more inquiries, again lowering your score. And you may not qualify for the first one.
Close the Discover card ONLY when you know for sure that you've got plenty of credit and cash.
Good to see you again, Phil, I was worried about you.
Christine |
| Sean | Thursday, January 13, 2000 - 02:51 pm
Well, it sounds like if he closes the card now he'll get to keep the previous, lower rate.
In case you haven't noticed the federal reserve has been raising rates recently. My own cards have been creeping up (without any notification, I might add, and I don't have a variable rate card). It has crept up 0.5 percent in the past year since I got the card.
Not to say that closing the card might not cause harm to his credit score. It certainly might do that, although I can't say for sure.
I would be happier with the cards I have if they had, instead of "sneaking" the rate increases in (without even so much as a change in terms slip in the bill) if they had been as professional and courteous as Discover. |
| Christine Baker | Thursday, January 13, 2000 - 03:49 pm
1)
Discover declined to give me a card while my exhusband got a $3K credit limit. Our applications were identical. Income, employment, everything.
I was declined because our phone was in *HIS* name.
I consider that neither professional nor courteous.
2) Phil stated:
a) I do however have high balances on my cards. Three cards is all I have.
b) They want no payment on a $1200.00 balance
c) The only reason I ever considered a Discover
card was because they told me I qualified for
a silver card with a minimum $5,000.00 credit
line.
IF I wasn't convinced that Credit Scoring is mathematically flawed, I would bet some serious money that Phil's Scores will be lowered SIGNIFICANTLY as soon as Discover reports the closed account.
And then of course the other cards will raise their rates too. And he'll have no way to get lower rate cards (as his Score will be too low.)
Then he'll borrow more money from the 2 remaining cards to make the higher payments.
And then he'll run up against his credit limits.
And then he can file for a Chapter 7.
THAT'S what Credit Scoring does.
The 2 cards may not be worth it. But I've seen this scenario time and time again. People start with low rate cards. They use them. Then the rates and payments double or triple. Then they can't make the payments. Then they discharge. |
| Phil | Friday, January 14, 2000 - 05:08 am
Thanks for the advise Chris and Sean. Thanks for
being here Sean. Your very knowledgeable. I
kept up on the old FCRA but not the new. It
looks like big bucks bought corporate America
LESS responsibility. Typical!!
I've decided to close the account. I DON'T like
companies that operate this way. I get offers
in the mail almost everyday. Providian keeps
offering me better and better deals. They are
now offering me a silver card with a minimum
5K credit line with a fixed rate of 5.99%
I don't trust them. There is a catch however.
The APR for balance transfers is something like
18%. No thanks!!
Here is what my file looks like (Trans Union)
Discover-bal$1200.00//$1500.00cl
Mastercard-bal$1400.00//$2000.00cl
Best Buy-bal$300.00//$1200.00cl
Bank One auto loan//$3000.00 bal (approx)
I plan on closing the Besy Buy account in order
to raise my score.
I also have 1 unrated account. A Discover card
number was stolen on line. Loss to creditor
ZERO. There are currently 4 inquiries on file
all tied to accounts.
Here is the irony of FICO scoring. Earlier in
the year I purchased a computer from Best Buy.
No interest for 1 year. I asked for a credit
line increase. They said I could have $700.00
and if I wanted more they would have to make
another inquiry. With the inquiry they were
only able to offer me $500.00 and noted that
my score was lower than the original score they
had obtained. Naturally they would not tell me
either of the scores.
In addressing Discover I am not even mentioning
their letter. I am simply asking that the
account be closed and that it be reported that
the consumer requested the account be closed as
required by the FCRA. I'm sending this letter
to two different P.O.'s just so they get the
message. I have almost always sent them $100.00
per month even when the minimum payment was $28.00
Thanks!!
Phil |
| rcb | Wednesday, January 19, 2000 - 10:41 am
Phil -
Closing the BB account will probably hurt your score (ratio of outstanding debt versus available credit to high). Just pay off the accounts and leave them open (you only have four revolving accounts).
Discover said that they would close the account and you could pay off the balance at the OLD rate. Be aware that if YOU close a credit card account (most of them) that has a balance, they can raise the interest rate - read the fine print on the app that you signed and in your agreement. Sounds like a double edged sword.
I'd "let" them close it, then contact the credit reporting bureaus and dispute the status. They'll add the "CLOSED AT CONSUMER'S REQUEST as a CONSUMER COMMENT. |
