My Sister Sent Me This Email

[MorningGlory]

i'm still hoping someone will explain to me how it is legal for a lender to raise your interest rates / payments based on anything OTHER than the contract made with said lender? (as in the example of your truck payments being skyrocketed because you were late on a payment to a furniture company?)

At the moment, it is legal. This came about because the powerful credit card lobby put pressure on...you guessed it....Congress. They've pretty much had carte blanche for years. Oh, and don't forget the $30.00 late fee if you're ONE DAY late on your payment. I pay my bills online for this reason; they can't claim they didn't receive the payment on time.

[Axxman]

I just disagree with that stance on moral, political, and biblical grounds.

i'd like to know the "biblical grounds" for the lack of grace and compassion for people you have demonstrated on this thread. or why you think your stance is biblical. (because what you're saying it that those who oppose your view are being unbiblical.)

I'm sorry Charitow...*edit* This is a civil convo and I have plenty of compassion for people who are experiencing financially difficult times.

As far as my biblical opinion:

(Ro 13:8) Let no debt remain outstanding, except the continuing debt to love one another, for he who loves his fellowman has fulfilled the law.

I do not believing that borrowing is a sin. However, borrowing makes a person a servant to the lender (Proverbs 22:7) and we cannot serve two masters...so when you go into that arrangement knowing FULL WELL that paying back that debt is going to be difficult, or troublesome...I believe that is unbiblical.

(Psalm 37:21) The wicked borrows and does not pay back, but the righteous is gracious and gives"

[kat8585]

I'd bet 9 out of 10 consumers know EXACTLY how credit cards work.

I didn't know at first, but I sure found out! And I did stop charging on them.

[kat8585]

i'm still hoping someone will explain to me how it is legal for a lender to raise your interest rates / payments based on anything OTHER than the contract made with said lender? (as in the example of your truck payments being skyrocketed because you were late on a payment to a furniture company?)

Is it in the fine print?

[Axxman]

Let's try this one more time, Axx....a person cannot just stop doing business with their credit card company. You have to PAY them what they demand or your credit is ruined. You can transfer your balance to another company or pay them off. There is NO other option. The whole idea is for the LAW to stop lenders from gouging customers who are paying their bill and paying on time. Why do you not seem to get this?

Sorry Glory...i shoulda responded to this before and I got distracted because I am responding to different people.

You are right, of course, that you cannot teminate the relationship completely while there is still an outstanding debt, without reprecussions...but you CAN stop using their business. If a person has borrowed so much money that they cannot quickly re-pay and terminate the relationship that is nobody's fault but their own. I recently bought a number of appliances from a company...and several items are basically junk that don't work properly. I've made it CLEAR to the company that they have lost my business because of the quality of their product...but I still have to deal with them as I work through warranty and replacement issues. So I've stopped doing "business" with them, even though the relationship isn't completely severed until the original business is taken care of and settled to BOTH parties satisfaction.

I also reject the notion that they are gouging people who miss payments. As I demonstrated before...a rate increase from 5% to 23% is not really that significant on a per month basis, but over the long run it can add a couple of years to your payoff date if you insist on making minimum payments. Uncomfortable? Maybe. But not exactly back-breaking or gouging.

[Axxman]

i'm still hoping someone will explain to me how it is legal for a lender to raise your interest rates / payments based on anything OTHER than the contract made with said lender? (as in the example of your truck payments being skyrocketed because you were late on a payment to a furniture company?)

Is it in the fine print?

Its because it is considered "open-ended" credit. The terms are usually spelled out in the Account Agreement contract that most people don't read thoroughly. The banks can (and do) monitor your credit reports and because credit cards are most often "open-ended credit accounts" that can continually be re-used they retain the right to charge interest based on your current ability to re-pay. The bank is looking for information that indicates the level of risk in continuing to extend unsecured open-end credit. If you miss a payment on another account, your credit score will go down.

That is why using a car loan or house loan as an example is really flawed. Those are NOT open-ended credit lines that may incur further charges in the future. If you cancel a credit card it is no longer considered an open-ended credit and lenders cannot raise your rate except in very specific circumstances.

[Believer1997]

i'm still hoping someone will explain to me how it is legal for a lender to raise your interest rates / payments based on anything OTHER than the contract made with said lender? (as in the example of your truck payments being skyrocketed because you were late on a payment to a furniture company?)

Is it in the fine print?

Its because it is considered "open-ended" credit. The terms are usually spelled out in the Account Agreement contract that most people don't read thoroughly. The banks can (and do) monitor your credit reports and because credit cards are most often "open-ended credit accounts" that can continually be re-used they retain the right to charge interest based on your current ability to re-pay. The bank is looking for information that indicates the level of risk in continuing to extend unsecured open-end credit. If you miss a payment on another account, your credit score will go down.

That is why using a car loan or house loan as an example is really flawed. Those are NOT open-ended credit lines that may incur further charges in the future. If you cancel a credit card it is no longer considered an open-ended credit and lenders cannot raise your rate except in very specific circumstances.

if 9 out of 10 consumers know exactly how credit cards work, why are you having to explain all this?

If you miss your house payment - your credit quickly goes into a spiral.... if you want to re-finance, then your credit history is looked at closely (revolving and open ended" credit.... So ultimately, you can garner more charges on points, etc. in refi if your credit is in the drain..... 9 out of 10 do not know how credit works - if they did - there would not be the mess we have now. On opening day of every college campus in the US there are banks and credit card companies present to offer your kid a t-shirt or some other idiotic item should they sign up for a credit card. These "kids" are adults but are basically clueless about interest rates, compounding and credit scores. There's another whole echelon of people with college educations graduating with Lots and Lots of credit card debt.... So I don't know where the "9 out of 10" came from- but I think it's a little ambitious statistically to think it's that high.

[Believer1997]

this is where the "9 out of 10" came from:

axx said

They are not being misleading...I'd bet 9 out of 10 consumers know EXACTLY how credit cards work. I'd also be willing to bet that 9 out of 10 of them continue to use credit cards inspite of that knowledge and just keep complaining about the companies that are lending them money they don't have.

so i was just asking him why he had to explain it all if most everybody knew it. i agree with you, Believer. i don't think most people do know exactly (or in some cases, vaguely) how they work.

Oh - I know he keeps saying 9 out 10 know what they are doing with credit.... obviously NOT.