interest rate hike, NOT ACCEPT?

[LivesinPhilly]

From Pennsylvania. Question about negotiating with CC company directly.

Have several accounts with a credit card company called MBNA that reside in Delaware. (small one through AAA, AKC, etc.) have paid everything timely for years. Unemployed, so used them more but still paying timely. They raised my rates on several cards to like 30%, realizing this, I called customer service, why, what can I do , no recourse? They don't like my ratios or something and there's little I can do. Now I'm paying attention to the statements and have notice on another from them they are going to increase, and it says in the "Important ammendment" that I can write to "not wish to accept these changes". 1) What are the ramifications of me sending that letter?
2) Bank One has also done this, I assume for the same reason as I've paid timely on them as well. I can't afford 30% on this debt and I have equity in my home & savings that makes BK an unwelcome option & I'd rather pay them at a reasonable rate. I keep thinking that I can pay off either Bank One or MBNA and then secure the other one against my home if they were to drop the rates. But I don't have cash to pay both and my call to MBNA was scary they were NOT helpful; any suggestions on whether/how to negotiate with either MBNA or Bank One (now I guess merged and turning into Chase).
3) If I were to pay one off, this would improve my ratios? Would the rates on the others go down magically? What are these ratios they are talking about?
Thanks in advance!!!

[cmorris]

You are the victim of the "universal default" clause. Creditors will check your credit reports and they consider high use of credit cards (w/ or w/o lates, charge-offs, etc) a risk. They rate-jacked you because of high utilization of your credit lines (how much you owe compared to your credit limits).

You can send a letter through [URL=http://www.planetfeedback.com]planetfeedback.com[/URL] and get through to the executive offices that way. They may work with you. If you decide to not accept the terms, they can reinstate your previous interest rate. BUT they will close the card. This will make your utilization even higher.

You can pay down the balance on one or both cards. After this posts to your credit reports, they MAY lower your interest rates, but don't count on it. They make more money with the 30% interest.

It is your choice about what to do. You can pay down some on both cards (rather than pay one off), pay one off, close both accounts, or keep paying minimum payments. But try PFB; it might work for you.

[Ladynred]

Don't expect MBNA to negotiate on anything. They have made BILLIONS by doing this to people and they will not budge until you file for bankruptcy.. then they'll make a ludicrous offer.

The ratios that affect your credit scores, and what the credit card companies look at are 2-fold: your debt to income ratio, and your utilization to credit limits.
If your debt goes up, even w/o any negitives, those ratios change and the banks freak out, you're becoming a bigger risk, so they jack your rates. If your utilization goes up and your credit limits don't, thats like waving a red flag in front of a bull.. you're in for a goring ! The 'ideal' utilization is about 20%, anything more than that and the banks will nail you.

You're stuck now in a nasty spiral. If you can pay off some of the debt, it may help your ratios, but they won't be lowering your rates 'magically', they will make you beg. Good will letters might work, and so might Planetfeedback, but I wouldn't be holding my breath. If you can balance transfer to another card and dump MBNA and FUSA, you may be better off.

[Lindsay J]

I too, am perplexed by the logic of the credit card companies when they do this. If they are concerned that you may be late pay with them in the future, or are close to your credit limit, how does their raising the rate on a consumer help the consumer lower his debt? IT DOESN"T!!!!! It is simply an excuse for them ot further gouge the comsumer & claim they have a "right" to protect themselves. Protect themselves from what ? Someone who has never paid them late or never paid any other accounts late? I feel this is a way they try to make up for bad losses they have incurred on other accounts that they lost money on.
Do what I did: order FICO Scores & credit reports from all 3 Credit reporting anencies, contact the State Attorney Generals Office for the state they are domiciled in, contact your State Attorney General's Office, contact the Federal Trade Commission, etc. Ask your credit card company to send you a cardmembers agreement. Be patient and do your research first. Find out your rights. Then proceed as you see fit.

Good luck, Lindsay J.