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|Originally I opened this $8,000 Visa in 2006 with Providian after it sent me a pre-approval for a 1.99% balance transfer rate.
Of course I knew that the rate would go up, but I would have NEVER expected a 26% rate.
Washington Mutual purchased the account from Providian and in May they sent me a notice of Change in Terms. Please note that it does NOT state what the rate will be. Washington Mutual does not disclose the reason for the increase, but it "may" have been based on my Trans Union credit report. And while the notice advises that I have the right to obtain my Trans Union credit report and to dispute any incorrect data, there is no mention of a right to have the rate lowered if the credit report contained incorrect data.
I actually didn't receive the statement with the notice until months later and I pay my credit cards online. There was NO notice online.
Even if I had received the notice on time, I would NOT have "opted out" and closed the account. I don't have a mortgage or a car loan, my only debt is on credit cards and that's because I'm building a house. I tried to get a construction loan in 2006, but due to the requirement of using a bank approved general contractor, plans, bank fees, a relatively high interest rate, etc. etc., my house would cost me at least twice the amount, or about $300,000 instead of $150,000.
It just doesn't seem like a good idea to throw that much money away and then end up with a house that's not really what I want.
The house still isn't finished and I'm out of $$$. I sold my old place, but for less than I had hoped and I had to carry a note.
I figured I'd end up paying an average of about 10% on the credit card debt until I finished and get a mortgage to pay off all the credit cards.
Good plan, but as so often, it's not working out. Many of my credit cards are now at about 20%. My Advanta business card is a notable exception, still at 7.99%. And to my surprise, Capital One recently sent me 4% checks and Chase also only charges 11.24% and recently sent me special offer checks. The trouble with the low rate checks is that you have to be able to pay the accounts off before you can USE them and I don't have the cash.
At any rate, I can pay all my bills and then pay for groceries, fuel and whatever minor emergencies with the credit cards as they're slowly paid down. If the creditors CLOSED the accounts, I would have to default because I'd have to use my income to support myself and pay the business expenses instead of the credit cards. And it obviously makes a big difference whether your minimum payment is $154 or $278 on a credit card.
In 1/07, my WaMu rate was 11.74% with a $154 minimum payment.
In 9/07, my WaMu rate was 25.99% with a $278 minimum payment.
On 11/15/07, I finally called Washington Mutual, as posted at my blog.
I was on the phone for 38 minutes and initially I spoke with a WaMu rep who wouldn’t or couldn't answer one simple question:
“Could you just tell me what I did that is so horrible that I deserve a 26% interest rate?”
She kept talking about changes in terms and agreements.
In fact, I did NOTHING to deserve a 26% credit card interest rate. My credit rating is flawless. However, I was “profiled” and therefore determined to be high risk.
The closest I got to a meaningful answer:
“…we increase an APR based on FICO and internal scoring factors due to a perceived increase in risk …”
I requested that she transfer me to her supervisor. This is the transcript of my conversation with supervisor Marian, employee ID 457558, beginning at about minute 31:
Me: I’m writing a book about credit, foreclosures, bankruptcies and why people end up in those situations and it just occurred to me that I’m paying you 26% interest and I’m wondering why that is, since I’m not aware of a single late payment.
… pause ...
No collections, no judgments, why am I paying 26% interest?
WaMu: All right, let me first review your account, I don’t have the information in front of me.
… pause ...
Hang on a second.
… pause ...
Ok, I’m trying to check your account history here.
WaMu: All right. Your account has undergone a change in terms way back in May 2007. And prior to the effectivity of this particular change we did notify you via a statement insert in May regarding this particular change in terms. So what happened was, you were given enough time to be able to opt out from this change being in effect, however you were not able to opt out [inaudible] time frame. So, the change of terms has already taken effect and that is why your APR right now is your current rate.
Me: So it has nothing to do with my credit or paying late or anything like that, it’s just because you’re trying to make as much money as you can and you do it. Is that correct?
WaMu: Yes, uh, no, it’s actually, this decision is based on, uh, we cannot just change your terms, uh, just like that. There are specific credit criteria, all right, prepared by our credit department and of course we do review all accounts before, of course, an account is selected for, for the change in terms.
Me: Well, I don’t understand. Do you understand me? I don’t have a late payment, I pay all my bills on time, I don’t have any judgments, I don’t have any collections, why are you charging me 26% interest?
WaMu: That may have been the case, ma’am. Individually, this does not mean that a customer has bad credit or that anything is wrong with your specific account. But, collectively, as a whole, ok, certain customers do actually fit a certain profile which shows an increased risk or an increase in risk, ok, those were the customers who were effected by this particular change in their account agreement. And that’s why I said it’s actually a business decision.
Me: Should I make a business decision too?
WaMu: What do you mean, ma’am?
Me: I could make a business decision. I could say why the hell am I paying Washington Mutual 26%, why don’t I just STOP paying?
… pause …
And then I can prove you RIGHT! You are correct, I’m a high risk. Do you want me to prove you right?
… pause …
I can do that.
WaMu: It’s up to you ma’am. I am only trying to explain to you what has happened to your account.
Me: So you don’t care whether I make one more payment or no more payment, whether I pay this off or whether I file for bankruptcy. You just don’t care.
WaMu: Ok, of course we do, ma’am. However this, we are talking about your credit.
Me: Mhm. We are talking about MY credit, MY interest rate, MY money.
WaMu: Which Washington Mutual has lent to you.
Me: Under quite different terms, as you may recall.
WaMu: Ok, but under your account agreement as well, ma’am, there is the provision there that states that we have actually the right as well to change any part of your account agreement and to remove any terms, condition or requirement, we will give you notice prior to the effective date which we have already done for any such change.
Me: Do you understand that I also have the right NOT to pay you?
WaMu: You can choose not to pay us, but you owe this money.
Me: Not if I discharge through bankruptcy.
Do you understand that right now there are probably 20 million people who could walk down to the courthouse and file for bankruptcy?
WaMu: Ok, that’s actually a possibility. Like I said, it’s up to you.
Me: Ok, I’m going to give you an option here. Here is what we’re going to do. You are going to reduce my interest rate to the 11 point whatever it was in May, or you don’t. If you choose not to, then I have a decision to make too.
WaMu: All right, then, actually the answer to that, ma’am, is that, ok, we have actually given you enough time, in order to opt out.
Me: I do not want to opt out. If you close my account, you will never see one penny from me again.
WaMu: We have no other choice. [we both talked at the same time]
The bottom line is, we will not be able to reduce your APR, I’m so sorry.
Me: Ok, you have a good day.
WaMu: Have a good day, will there be anything else?
Me: Yeah, I’d like a credit for the over limit fee.
WaMu: Well, it’s not our procedure to reverse those fees, because those are valid charges, ma’am.
Me: Ok, you have a good day.
WaMu: Have a good day, thank you for calling, have a nice day.
My home is protected and there's really nothing that any judgment creditor could take from me. I'd have to file for bankruptcy if they get a judgment in order to get a mortgage when my house is finished. But if I discharge or just stop paying my credit cards, I don't need a mortgage anymore.
I'd lose my "flawless" credit rating. But it doesn't seem to do me any good anyway, resulting in 26% rates.
Instead of a payment, WaMu will get the mailing of this posting and a copy of my press release.
That the legislators condone this loansharking is a disgrace. I can't make legislators do their job.
But I CAN stop making payments and I can encourage others to stop making their payments.