A late payment, then my APR goes up?

billion25

Hi there:

I have a Capital One card that I pay at least the minimum on every month.

I got a notice from them that my APR was going up as of next month from 14.9% to 24.9%. I called them to ask why and was told that they reserve the right to vary my interest rate at any time. But 10%??? That seems harsh. Is it legal to do this? Has anyone else experience anything like this?

I had a couple late payments over the past year, most recently in May. Could this be a reason why they are increasing my APR?

I want to switch to another card, but I don't want one that might do the same thing in the future.

Any advice is appreciated.

hopefulfooluk

Almost certain that they've upped your APR because of the missed payments. You're lucky they've let you stay on your current APR so long if you missed payments in May and earlier, most card companies shoot it through the roof the day after you miss a payment.

BTW, yes, it is legal to do it. You signed to say they could, so they can.

cifpower

In America, if you are late paying your electricity bill the interest rates on your credit cards rocket.

smartsaver

If you have a 0% interest deal and you make a late payment or go over your credit limit you lose the 0% deal changes to paying interest immediatley ..

You have to be very organised with credit cards... if you're not they make money out of you

CTT_2

Sorry no sympathy for people who complain when they miss a payment and the card co extracts its revenge by upping the rate. The rule is always, set up a dd for the min amount so at least it is covered. Also in the eyes of these companies you are high risk and they set an apr appropiate to the risk. After all isnt this how loan companies assess us when we apply for a loan it is based on our financial history and set the apr accordingly.

smartsaver

CTT wrote:

Sorry no sympathy for people who complain when they miss a payment and the card co extracts its revenge by upping the rate. The rule is always, set up a dd for the min amount so at least it is covered. Also in the eyes of these companies you are high risk and they set an apr appropiate to the risk. After all isnt this how loan companies assess us when we apply for a loan it is based on our financial history and set the apr accordingly.

I agree with you in principle but we are all human and all make mistakes... Although reading this board sometimes I wonder :rolleyes:

CTT_2

smartsaver wrote:

I agree with you in principle but we are all human and all make mistakes... Although reading this board sometimes I wonder :rolleyes:

AGREE entirely this is why we need to minimise any damage by putting safe guards in place and setting up a dd. Its us against them....

daveboy

:wall:

Been a bit busy today....usually am a bit quicker

billion25

Hi there:

Thanks for the feedback. I've done a bit of research over the weekend and I see that removing a 'promotional rate' based on late payment is pretty much standard. However, increasing a standard APR based on late payment is not mentioned anywhere. I'm thinking of challenging Cap One on it, but I may just move my business elsewhere. My risk has not changed in anyway, as I was just a bit sloppy making payments.

I'd like to give my business to a card company that doesn't seek to make its profit solely on ratcheting up the APR on people who are in supposed financial difficulty (even when that's not the case). I also think the legal ground for doing this is somewhat shaky and against (at least the spirit) of the Banking Code.

Are there any card companies out there that are more transparent in their approach to APRs? Or all they all quick to increase them based on late payments?

InsuranceLiability

billion25 wrote:

My risk has not changed in anyway, as I was just a bit sloppy making payments.

payments?

If you have made late payments your 'risk' has changed

billion25 wrote:

I'd like to give my business to a card company that doesn't seek to make its profit solely on ratcheting up the APR on people who are in supposed financial difficulty

How would you like them to make their profits?

zcaprd7

Erm, given that they can ask for their cash back at any time they can pretty much charge any APR they like, provided they warn you...it pays to keep them happy.