Living with credit

Emily’s List: More card agreement changes

Emily Crone

Oh, joy. Today I received another letter from my credit card issuer (Bank of America) notifying me of changes to my account.

This time, “as a result of a change in [their] business practice,” my APR for purchases will be calculated differently. Now, “it will use a variable rate formula based on the U.S. prime rate.” If that rate changes, my APR (annual percentage rate) will too, it says. Before, it had a fixed APR; it wasn’t variable.

A rate 'jack' -- get it?

Fortunately, I’m not experiencing what so many others have — a sudden, no-reason increase in rates (sometimes called a “rate jack“). It says my current APR will not change immediately as a result, though it could in the future. While I don’t carry balances often, I do from time to time, so any potential rise in APR does alarm me. My APR for balance transfers and cash advances will also change, but I do not use those features, so I’m not too concerned about that.

One thing I did like about the letter is that it included a small flier titled “Understanding the costs of credit.” In past letters, they have included fliers called “credit cards and you,” which were not very informative. This one is actually handy and reminds consumers of the consequences of carrying balances. Under a section called “retail purchases,” it explains that if you pay your balance in full on time each month, you won’t pay interest on the account. “In essence, you’ll receive an interest-free loan during each monthly billing cycle,” it says.” If you pay less than the amount due, the letter says, you will pay interest. It provides similar tips on fees and interest for cash advances.

I say kudos to Bank of America. Sure, it’s basic information that we should all know, but some consumers may need a reminder of this, especially when money is tight and people may forget that a credit card is a loan — not free money. It’s especially useful to include it along with a letter about changing interest rates.

I’m curious: Have you received any change in credit card agreement letters, too? I feel like I am receiving more than usual. Either way, I hope you will read on and enjoy nine of my favorite credit card and debt-related posts in the personal finance blogosphere from the past week!

1. Have you been good about not spending as much on your credit card lately? That’s great, but Trent at The Simple Dollar reminds readers that not spending is NOT the same thing as saving.
2. Jabulani at WiseBread recounts his experience with identity theft and offers tips on how to deal with the inconvenient crime.
3. The Digerati Life recently had a credit card account closed without much notice, and provides tips about how to get a new credit card fast when you are in a similar bind.
4. Bargaineering explains the basics of how debt settlement works.
5. Do you have a tendency to impulse shop? Yeah, me too. No Credit Needed discusses eight techniques you can use to break the habit.
6. Alex at Queercents discusses how hard it can be to keep those credit cards paid off, and discusses the methods that do and don’t work for her.
7. Single Guy Money provides tips on how you can minimize the risks of your credit card account being closed.
8. No more room on your credit card to squeeze in a few more expenses, such as furniture? Kacie at Sense to Save says that sometimes, the things you need are available for free.
9. Christian Personal Finance offers seven different (free!) printable budgeting worksheets, including one for “debt snowballing” and one for scheduling bill payments.

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  • Christy

    I received the same letter – how are they able to legally change a consumer from a fixed rate to a variable? I entered an agreement to for a fixed rate and it did not have a time limit.

  • George

    Same letter here too. However, I now received a Visa Signature card with World Points replacing my Platinum Plus card. Is there a catch that I’m missing?

  • E

    looking for a way to determine if paying a transfer fee of 3-4% to keep debt interest free is the smart thing to do? How many times does a person pay this trasnfer fee before it neates the 0 interest feature…of course payment in full is the real answer…but not right now!