Company raises couple's interest rate despite good credit historyPosted: Updated:
PHOENIX -- Have you checked your credit card statement lately?
Now, more than ever, you have to check your statement every month.
You should always check your credit card statement for accuracy, of course, but there's another reason you need to be checking your statement and that's because your interest rate may have gone up drastically and you never even knew it.
Mike Davey and his wife say they've been loyal, satisfied customers of a credit card company called Advanta.
"Never missed a payment, never been late, never had extra charges, never exceeded the limit," Davey said. "We've been the perfect credit card customer."
But being the perfect credit card customer is costing the Daveys. That's because on their last statement, they realized that Advanta increased their interest rate from 7.99 to more than 25 percent.
Davey says he immediately called Advanta to find out why there was such a drastic increase.
"And they said because of the economic climate it's just up to 25 percent," he said.
Davey and his wife aren't alone. Published reports indicate many credit card companies are jacking their interest rates on good-paying customers like the Daveys.
One theory is if banks are losing money in the real estate market, then they'll make it up by charging more in the credit card industry.
But the Daveys believe that could spell disaster for someone who is in a financial pinch right now.
"That could either push them over the edge where they fall into late payments, bankruptcy or foreclosure," Davey said. "That's forcing other issues."
For example, Davey's new interest rate pushed his monthly finance charges from $77 all the way up to $220.
Davey says he and his wife are fortunate because they're in a position to pay off the balance and stop using their Advanta credit card altogether, but he wonders about people who are not as lucky.
"Look at that statement when it comes in," Davey recommended. "Check that interest rate of what you're paying."
By the way, Advanta did not want to talk to me about their rate increase. But it's not just them. Many large banks are doing it, so look at your statement every month.