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The following happened to me in the past month:

1. I have an account with NextCard. It has a really nice interest rate of prime plus .49%, which, as the Fed lowers the prime rate, goes down. I think it's at 7.49% now. My balance is about $3.7K.

2. I closed two other credit card accounts that I wasn't using, probably about $12K worth of credit. I didn't want all that unused credit lying around.

3. I borrowed $3K on my NextCard account. (Not something I normally do!)

4. Got a letter from NextCard informing me that they wanted to raise my interest rate to 12.99%. I sent them a letter asking why, and they sent me back a canned answer listing four reasons. The reason that seemed to matter was high amount-borrowed-to-credit ratio. I think I had increased this number by lowering my available credit and borrowing.

5. I got a free copy of my credit report from Transunion. It correctly reported that I was current on everything and had no late payments at all. Nothing unusual.

So: what to do? Any ideas? Especially, if I close the account before the new rate kicks in, does the old rate stay in place, or can NextCard change the terms even after the account is closed? I'd be grateful for any feedback.

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It depends.

If they can show how their rate hike is consistent with your existing contract, they can hike the rate even if you close the account.

If not, you can prevent that rate hike from taking effect by closing the account. That does NOT freeze the rate, it freezes the contract. They will then, presumably, jack the interest rate up to the highest level they can under the existing contract.

Now, what did you do with the $3K you borrowed? Could you ship it back to them?
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You have made a big mistake by closing your 2 other credit cards!Why?Because you have much less availiable credit,and this causes big problems with any creditor.If anyones is over 70% of total availiable credit used your creditor in return will raise your interest rates up because you look overextended too them!Now you are going to have trouble for the time being if you only have nextcard,and no other accounts availiable to transfer a balance with.If you have just closed the 2 cards recently you would want to apply for another account right away before your credit file shows the 2 accounts closed,otherwise you are going to have a tuff time getting a new card until you pay your balance down to 50% of total availiable credit used.You may want to reopen the 2 cards that you have just closed just to keep your debt to credit limit ratio low.Others out there will offer their advice to on this matter.
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You closed down 2 accounts. Fine. Of course there was no balance on them when you closed them. I fail to see the logic why you did this. I hope they were not nice old cards with a good record of payments, because you may have wiped out some excellent history.

Now you owe over 6K to one NextCard. They don't have a stellar reputation. Read your fine print book and see if they can in fact do the 13% shuffle to you or not.

You can try sending a certified, r.receipt letter to them within 10 days saying that you REFUSE the new rate increase.

Say good bye to NextCard. If they accept your refusal to pay the rates you can NEVER NEVER NEVER use the card again until every dime is paid off.

Of course you NEVER NEVER NEVER close down a card with any type of balance owed. Then they will hurt you and it won't be for 13%.

wdg :>
lots of Never today!
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My own .02 on Nextcard...

I was a bad boy on bills due to personal problems around the first of the year, Made sure rent and CBank got paid on time, that was it. As a result NCard doubled my APR to 22.49% Last month's payment was on time but the hiugh APR remains. What's the story? Will they wait 6 mos. or so before dropping back to 12.9%?
My .02(less before Nextcard;)

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Will they wait 6 mos. or so before dropping back to 12.9%?

If you're lucky.
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I have a NextCard account and when the promotional period was up, they raised me to 18.9% or something obscene like that. I called them on the phone (number on back of card) and asked to speak to a supervisor. I told her this was unacceptable and asked if they could lower the rate (especially since EVERY time I turn on my computer, there's a NextCard ad, offering 2.9% and 9.9%). They gave me 12.9% fixed rate. It's not the best rate, but it's better than lots of others.

Try calling them.
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I have closed many an account when I got that "we'd like to raise your interest rate to 127% effect, oh, yesterday" notice with my bill. I send a letter which states that I have gotten their change in terms and that I do not accept the new terms. This has always resulted in the card being closed by consumer request and the interest rate stays where it was per the original terms - usually that means they can only raise it on me if I'm late with payments or something.

A thing to watch out for is using the card again after you've done this. I had an online vendor charge my MBNA card after I closed it, and they cheerfully put the charge through, upped the interest rate on the entire $5,000 balance to somewhere around 23% and then refused to reduce it again when I called and screamed bloody murder (the charge was unauthorized).

Good luck, and may the farce be with you!
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Here are some pointers which will help people avoid situations like Nextcard just subjected you to:

NEVER close an account with a balance on it. Your APR will go out of the roof and you have no way to negotiate it back down. If you must close, make sure that you owe no money on the account before doing it.

NEVER ask to reduce your available credit on any card, I don't care what Fair Isaac says. "Too much available credit" is a farce that they want people to believe and reducing available credit without reducing balances owed will seriously increase your total balance:limit ratio and cause your credit risk to shoot skyward. Nextcard is absolutely right to consider you high risk. If you're worried about too much available credit, ask them to put a cap on limit increases but NEVER ask them to decrease limits.

NEVER close zero balance accounts with long histories and spotless records. That will cause your credit worth to plummet and it will take as many years to rebuild a long history.

CALL your other issuers (i.e. the accounts you closed) and have them re-opened ASAP. If you closed them less than 60 days ago, you'll have a good chance of getting them re-opened.

Once they are re-opened, then negotiate hard with Nextcard to reduce your APR. In the meantime, ask your other issuers to give you a balance transfer option to transfer that Nextcard balance. Once you have a zero balance with Nextcard, then you can play hardball and get them to make that APR really drop.

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My experience with NextCard was nothing but bad.

When I opened my account they gave me a 9.9% rate....

Three months later, I noticed that the rate had been raised to over 19%!!!

When I called to find out why, they told me I had late payments...

I was pretty sure I had paid them on time, so I asked them to list the payment due dates and when they received the payments...

The MOST overdue payment was 3 days late!!!

That's right, 3 days...

I immediately applied for an AMEX Delta SkyMiles card, transferred the NextCard balance (about $1500) and closed the NextCard...


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