The New Economy
For a while now, I've had a Capital One mastercard. It has served me well. It has had an APR of 11.04 percent, and I generally keep it paid off. One time, in the four years I've had the card, I paid the bill three days late. All in all, a solid customer credit card relationship has been had by all.
However, today I got a letter saying they are CHANGING my terms.
Starting April 17th, I get a "promotional" APR of 17.9 percent...until January 1st, 2010.
Upon January first, I will have a variable APR based on 26.15% + the Prime rate. They estimate my interest rate to be about 29.4%.
The reason for this...."extraordinary changes in the economic environment".
As you may imagine, I am not alone in getting stiffed by Capital One.
The reality is, come June, credit cards will no longer be able to raise your APR without cause. Capital One is clearly trying to act preemptively, to make as much money as possible. I'm betting, if you cancel your card, you'll get a new card offered to you in July at the old rate. This is just a guess.
Ok, by and large, I'm a believer in the freedom to contract, and I normally would quietly cancel my card, and give them the finger from the privacy of my own home.
However, Capital One just recently took a huge 3.56 billion dollars in bailout money. They used this to buy some banks despite being in a healthy financial state. This means, in my eyes, they are beholden to the stockholders to an extent. To take a bailout payment and then turn around and undercut the citizenry is just appalling. The point of the bailout was to encourage lending, to unfreeze the credit markets, but this is a step in the exact opposite direction. Crippling interest rates do not encourage credit markets.
Needless to say, I'm going to be canceling my Capital One card...I don't have a balance on it, so it will be easy.
I'm not a big fan of government interference in business....until tax monies get involved. I think the government is going to have to drop a big hammer on these banks, who are taking the money for the purpose of opening up the credit markets, and then holding to the conservative strategy.
However, today I got a letter saying they are CHANGING my terms.
Starting April 17th, I get a "promotional" APR of 17.9 percent...until January 1st, 2010.
Upon January first, I will have a variable APR based on 26.15% + the Prime rate. They estimate my interest rate to be about 29.4%.
The reason for this...."extraordinary changes in the economic environment".
As you may imagine, I am not alone in getting stiffed by Capital One.
The reality is, come June, credit cards will no longer be able to raise your APR without cause. Capital One is clearly trying to act preemptively, to make as much money as possible. I'm betting, if you cancel your card, you'll get a new card offered to you in July at the old rate. This is just a guess.
Ok, by and large, I'm a believer in the freedom to contract, and I normally would quietly cancel my card, and give them the finger from the privacy of my own home.
However, Capital One just recently took a huge 3.56 billion dollars in bailout money. They used this to buy some banks despite being in a healthy financial state. This means, in my eyes, they are beholden to the stockholders to an extent. To take a bailout payment and then turn around and undercut the citizenry is just appalling. The point of the bailout was to encourage lending, to unfreeze the credit markets, but this is a step in the exact opposite direction. Crippling interest rates do not encourage credit markets.
Needless to say, I'm going to be canceling my Capital One card...I don't have a balance on it, so it will be easy.
I'm not a big fan of government interference in business....until tax monies get involved. I think the government is going to have to drop a big hammer on these banks, who are taking the money for the purpose of opening up the credit markets, and then holding to the conservative strategy.