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Last year I was paying off my HSBC card in big chunks, however, in August I started snowballing another card and paid only the minimum on HSBC (about $23 on a $1600 balance, rate was 3.99% for life).

Today I got a notice in the mail. It's a peice of paper folded in thirds to the size of a postcard and nearly got tossed when my son brought in the mail. Here's how it reads (emphasis mine):

To continue to provide quality service to our Cardmembers and to ensure profitability, we have changed the terms of your HSBC Credit Card Account as described herein. These changes apply to any existing balances as well as new transactions, and are effective with the first day of your billing cycle ending on or after June 1, 2007 (whether or not you receive a billing statement). All other terms and conditions of your Agreement remain unchanged at this time.

CUSTOMARY PURCHASE ANNUAL PERCENTAGE RATE ("APR") - The Customary Purchase APR applies to credit card purchases, balance transfers and cash advances made by credit card check. Your Customary Purchase APR has increased to Prime +19.25% ("Spread"). As of 3/1/07 this corresponds to a .07534% Daily Periodic Rate (corresponding 27.50% APR).

******

What the? I balance transferred to this card a long time ago, have never had a late payment on it (or any other card). My credit report was absolutely fine the last time I looked at it with a decent score (low-mid 700's). I've also noticed I'm getting a lot more good balance transfer offers lately (with no fees!).

Am I reading something wrong? Did they really just bump my 3.99% rate up to 27.50%? Does it just mean "balance transfers...made by credit card check" and not BTs made with an offer "for life"? I had planned to pay off another card within the next month or two with a bonus I'm getting, but I'll take this one out instead if I have to.
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OtherVoices,

I am shocked that they are raising your BT rate for life when you haven't been late with any payments on any cards. Argh! I don't recall which card it was (AT&T?) that raised my purchase rate due to profitability reasons. This sounds like the beginning of a new trend in the world of cc lenders. We are greedy and we don't mind telling you so!

I have a 0% BT with HSBC that ends in November; I hope they don't pull this crap on my account.

Please let us know what you learn after you talk to them. I hope that you will find that they sent you the letter by mistake.

Shire

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Am I reading something wrong? Did they really just bump my 3.99% rate up to 27.50%? Does it just mean "balance transfers...made by credit card check" and not BTs made with an offer "for life"? I had planned to pay off another card within the next month or two with a bonus I'm getting, but I'll take this one out instead if I have to.

Have you called and talked to the CSR? It sounds as though they're talking about the APR on new purchases, but I'd certainly want to verify that. And if they are, indeed, talking about across the board increases, you should be able to opt out of the agreement, thus freezing your current rate, in exchange for closing the card.

But I love the bit about To continue to provide quality service to our Cardmembers, as though profits were a secondary consideration.

Nancy
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>> But I love the bit about To continue to provide quality service to our Cardmembers, as though profits were a secondary consideration.

That jumped out at me too, Nancy. If they were totally honest they would admit that profits always come first.

Shire

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But on the flip side of the coin, they *are* a business, so it makes sense for profits to come first.

Shire


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I got a notice of this sort from Capital One, and was worried about my 0% for life on the balance transfet that I had. I called to check, and they said that such a promotional offer would stay at the promotional rate and not change. But do call, HSBC might be doing it differently.
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>> I got a notice of this sort from Capital One, and was worried about my 0% for life on the balance transfer that I had. I called to check, and they said that such a promotional offer would stay at the promotional rate and not change. But do call, HSBC might be doing it differently.


I called them a couple of hours after I posted. The rep in India said he didn't see that a letter had gone out for my account. And there wasn't a letter in my mail box today. Nonetheless, I'll be glad when the BT with this lender is paid off.

Shire

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> But on the flip side of the coin, they *are* a business, so it makes sense for profits to come first.

Which is why this is so strange - screwing your customer makes you a couple bucks now, but then they walk away and you have nothing.
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Well, that was an interesting conversation I just had with "Genevieve" from HSBC.

According to her my promotional rate of 3.99% will not be affected by the rate increase. I did find some fine print that says "In addition, if your Account is subject to an Introductory or Promotional Anuual Percentage Rate, the APR changes will not affect you until the expiration of your Introductory or Promotional Annual Percentage Rate, or if you fail to make your Minimum Payment by the Payment Due Date, or if you exceed your credit limit."

Now, I also asked her what the reason was for the increase on my card. I suspect that maybe because I never activate my new cards (I'm not using them for purchases, so I don't bother) that maybe it flagged my account as someone who wouldn't notice if the rate was raised? Anyway, Genevieve told me that "In order to provide the level of service you're accustomed to..." and "blah blah blah we're not making any money off of you..."

She also said something that I challenged her on. She said "This is an across the board rate increase. Everyone will see an increase in their rate." "To 27.5%? Even people I know who didn't receive a notice?" She quickly "apologized" and said "Yes, everyone will have an increase". "Well, yes, if the prime rate increases, however, 27.5% is extremely high for someone who has never been late on a payment and has a good credit score. Is there anything I can do to lower this?" She told me that there was nothing to be done now, but I could call back "in two weeks" or "maybe once the rate is in effect" (which according to that fine print won't be until my promo rate expires).

I'm not impressed with that "level of service that I'm accustomed to" but apparently, I deserve to (theoretically) pay an arm and a leg for it.

Maybe it's time to write a letter and see if I get anywhere. Despite the fact that the rate has no affect on me, it still ticks me off that they think I deserve that kind of nosebleed rate.
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Maybe it's time to write a letter and see if I get anywhere. Despite the fact that the rate has no affect on me, it still ticks me off that they think I deserve that kind of nosebleed rate.


FWIW, Chase did this to me a few months ago. My rate went from 5.99% fixed (ha!) to the default rate of 31.99% for no reason. Nothing had changed; I was still paying that card in full each month and the rest of my debt was being paid down and on time.

I wrote to Chase and asked to keep my 5.99% rate but I also told them if I couldn't, just close the account. They closed it; guess they were just losing too much money on me. ;-)

Minxie
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<<< FWIW, Chase did this to me a few months ago. My rate went from 5.99% fixed (ha!) to the default rate of 31.99% for no reason. Nothing had changed; I was still paying that card in full each month and the rest of my debt was being paid down and on time.


___

These rate hikes for people with good records makes me wonder. Are they attempting to screw you up by next jumping your due date forward -- making it likely some will end up paying finance charges?


Wouldn't put it past them.

I had one card (TMF w/MBNA) that repeatedly raised my credit limit, then slammed me with a higher interest rate for having too much available credit. Nothing else had changed.


Penny
suspicious to the point of paranoia?
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These rate hikes for people with good records makes me wonder. Are they attempting to screw you up by next jumping your due date forward -- making it likely some will end up paying finance charges?

I wondered the same thing, particularly as I wasn't even carrying a balance on that card.


suspicious to the point of paranoia?

It's not paranoia if someone's out to get you... :-)

Minxie
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<< suspicious to the point of paranoia?

<<< It's not paranoia if someone's out to get you... :-)


===

I fully agree with you on that.

I've been told that paranoid people live longer than other people. The explanation given was that we see the train coming sooner and have time to get off the track.


Penny
I was almost turned down for life insurance when I asked if being murdered was considered an accident (paid double). Yes, someone was out to get me -- back then.
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These rate hikes for people with good records makes me wonder. Are they attempting to screw you up by next jumping your due date forward -- making it likely some will end up paying finance charges?

You are not paranoid if they are really after you.

I check our credit cards every weekend and pay the balance (normally before the statement is issued). I don't track historical due dates and, therefore, won't know if they change it. There is no chance of being hit with a late fee (which is far more profitable to them than interest). I will be annoyed if I slip and pay a months interest, but they provide a useful service.

Debra
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These rate hikes for people with good records makes me wonder. Are they attempting to screw you up by next jumping your due date forward -- making it likely some will end up paying finance charges?


Possible. I'll keep an eye on the dates and see if anything changes. They could do that and hit me with the default rate as it were. They didn't need to bother changing the purchase APR if they were hoping I'd make a late payment soon (maybe statistically they feel I'm due for a late payment?).

If I had to guess, they're making little money off of me and figure, "Hey, raise the rate. If she ever does make a purchase, she'll probably never notice that we did that until it's too late."

It's a silly move on their part since it raising the rate on a $0 balance will earn them no extra funds. It's only increasing the chance I'll pay off the card sooner (they'll lose some interest there) and that I'll never use the cards for purchases (even if I needed to, with my credit history I have plenty of other less costly options). I've certainly lowered my opinion of them and would think three times before giving them my business in the future. If this is how they treat their good customers, I'd hate to see the rates they offer people who are less credit-worthy.

I'll draft a letter this weekend, if I have time. I don't plan to close the account just yet, as we'll soon be in the market for a home equity loan (NOT for debt payoffs, but for home repairs so that we can sell our house) and I don't want to do anything to lower my score.
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For those that are wobdering why the cc companies are raising rates; they are getting perpared for the Federal Law that takes effect in July 2010

http://boards.fool.com/Message.asp?mid=27630068
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