Isn’t it always a blessing to come home, check the mail, and be greeted by a handful of bills!  Don’t you just love that?

The Problem

Today I had the pleasure of getting an extra special treat from Capital One; one of my ever so thoughtful credit card providers.  Here is the letter I received from them:

According to the literature, Capital One is raising my APR by nearly 7% due to “the challenging economic environment”.  This is an incredibly steep increase in interest that has been implemented in order to pass the brunt of these tough economic times from the shoulders of a credit card company over to my shoulders!  I suppose they assume I have broad, strong, healthy, able shoulders!

I Tried Negotiating

Of course being the extremely frugal chap that I am, I called the powers that be and not only attempted to halt the increase, but actually tried to have my rate lowered from the original amount of 16.24%.  In order to be successful I knew I was going to have to strategically maneuver my way through the carefully constructed deterrents of the CC company’s convoluted phone system before finally getting connected with a “customer service rep” who could “help” me.  Enter Melissa.  Melissa was a charming young lady who most likely has a couple credit cards of her own.  My wife & I tried to imagine what Melissa was like outside of the scope of her CSR job.  Here are some of the things we came up with:

• She probably brings in around $7-$10/hour to sit on the phone all day and field calls from disgruntle Capital One “customers” such as myself all while worrying about her 6 kids and whether her 1989 Chevy Suburban would break down on the way home from work today.
• For this measly pay she takes the brunt of the grief for the corporate policy setters a.k.a. “leaders” who are doing one of two things:
  • Sipping brandy and smoking fine cigars on their yachts – or –
  • Finalizing the terms of their corporate “bailout” program compliments of the Federal Government

I digress…

In reality, as expected Melissa did have a script she was expected to follow, so I immediately switched into CSR communication guy and worked to create a distinction between the CSR and the company in an attempt to get her on my side and perhaps increase the chances of getting my rate lowered.  It didn’t work this time.  Melissa was thoroughly unable to help me lower my APR.  The only thing she could offer me was a Balance Transfer at 0% APR for six months, but even that would have cost me 3% of the transfer with a $50 minimum, so I graciously passed.

When I directly asked her why Capital One was raising my Annual Percentage Rate by a total of 7%, she only had this answer:  “Capital One is doing this as a benefit to our customers.  During these tough economic times we need to raise our rates so we can continue to be around and serve our you our customers.”

What??  Uhghh, yack, che heh heh uhhhal…

Sorry I just threw up in my mouth a little there.  If you’re going to blatantly raise my rates from 16% to 23%, at least have the decency to elude to the fact that I’m getting screwed over.  Don’t condescend me or insult my intelligence!  **RANT OVER**

So What’s The Answer?

There are only two options we have at this point:

• “You can choose to decline the changes to your rates and close your account.” – As stated in the wonderful mailing I received.  Going this route will terminate the card and forfeit any rewards you had accumulated.  Another potential negative is the effect this could have on your credit score.  Normally if you pay down the balance of a credit card to zero, it is in your best interest to leave that card open which will help boost your score.  If the card is closed, you are not provided that opportunity.
• If possible just pay off any remaining balance on the card before the rate goes up. This is the option I will be pursuing.  Because I am able to eliminate my existing balance within the next 2 months, I will pursue this route which will end up having a positive effect on my credit score.  The bible advises us to, “Owe no man any thing, but to love one another: for he that loveth another hath fulfilled the law.”  Romans 13:8 –  This is good advice and we would be wise to heed and follow it.

There you have it folks, one more reason we should be doing all we can to eliminate our debt and spend less than we earn, thus granting us freedom from the likes of companies and situations like this!

DFA is passionately dedicated to helping others break the bondage of debt using biblical principles.