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Important Notice Regarding Changes To Your Account

Most recently someone I know received a notice from a credit card bank with the above headline written in bold. This person has excellent credit and always pays more than the minimum balance. However, they do not use the card, so the balance keeps going down.

The current interest rate on the card is 8.99, the credit card company is giving my friend notice that they are raising the rate to prime plus 13.99, which would make the new rate about 17.99%.

Here is the kicker. The notice says, “Important, Please know that you have options”. If you accept the new rate there is no need to do anything. Isn’t that just nice of them. On the other hand, “If you do not accept the APR changes”, your card Will no longer be available for use“. Also, you will lose any rewards points you have accumulated.

Now for the implied threat. “If we close your account we will not be liable to you for any consequences resulting from closing your account or suspending your credit privileges”. They provide the disclaimer because they know that closing the account will negatively impact your credit rating. This is the equivalent of the loan shark telling you he’s raising the “Vig” and if you do not pay, he cannot be responsible for the outcome, you know, like broken legs, etc.

The reason stated for the change in terms, is that the bank needs to maintain profitability, and you’re paying more than you are asked each month, on time, is not allowing them to rip you off, so they are trying another tactic.

Aren’t our lawmakers wonderful? They wrote a new law making all this legal, called the “credit card reform act”. It does not officially take effect until June, of 2010. So, the banks are trying it out early. You know, like practicing.

Under the law when parties rewrite the terms of an existing contract in this manner it is called “Novation”. If your banks have raised your interest rates in this manner, then I strongly suggest that you get a FREE quote for a non-profit Credit card consolidation program The program works, and you can learn more about it by visiting: American Debt Enders. Just click on the tab that says “Personal Debt Management“.

If you would also like information on debt settlements or debt management, please feel free to browse our site as we also offer these programs. The consultations are always free and we are on a mission to help you attain debt freedom.

It is time for you to take control and not allow yourself to be victimized by these thieves. We want to help. Always free consultations with no obligation.

Written By:
Steven Ciantro
Member National Association of Certified Credit Counselors
American Debt Enders