Did First USA violate MD code? Please help

[Anonymous]

I'm so mad :@ :@ :@ , I just got my First USA statement. They more than doubled my rate!!! It's now at 24.9%!! I've been reading my state code on this matter (Maryland Code >> Commercial Law >> Title 12: Credit Regulations >> Subtitle 9: Credit Grantor Revolving Credit Provisions >> Section 12-903: Interest and Finance Charges), here is an excerpt:

"A credit grantor may charge and collect interest or finance charges under the plan on the outstanding unpaid indebtedness in the borrower's account under the plan at any daily, weekly, monthly, annual, or other periodic percentage rate as the agreement governing the plan provides, if the effective rate of simple interest does not exceed 24 percent per year. The rate of interest chargeable on a plan must be expressed in the agreement as a simple interest rate or rates. "

Can someone tell me if my understanding is correct in that, according to MD code, First USA cannot impose a rate greater than 24%? I want to know if what they did is a violation of MD code, and if it is what should I do? BTW, I have never paid late or gone over my limit with this account. They increased my rate apparently because of a chargeoff TL (unrelated account) in my EX report.

TIA for your comments/opinions.

[Anonymous]

THere is a Federal Compact that exemptes interstate banking from state usury laws. Here's a very recent Federal Court opinion on the subject.

http://www.bankersonline.com/lending/so_usury.html

[Anonymous]

Thanks, Bingo! The article was really helpful. I guess I better find out what the interest rate limit is in First USA home state. There probably isn't any. :@

BTW, in my state, I'm allowed to not to agree to this increase, and First USA should allow me to payoff the balance at the old rate (so long as I don't use the card anymore). I guess this is the same thing as me closing the account (with balance), isn't it? Has anyone ever done this and, if yes, what was the impact on your CR?

[kb9tbq]

Had same thing happen to my DH on a Citi Bank card, they jumped the rate from 11% up to 19% - had always paid as agreed, but he had unpaid medical collections on the credit report.

Called them, and they said it was just a change in their policy - that they judged nothing negative on DH's part, which I know was a lie, I had him call them back up to request a reduction in the interest rate - which they did. But only took it back down to 12%.

You might try that, calling into customer service requesting them to re-consider the interest rate. The only other way out of this mess, will be to pay down ASAP, or balance transfer the balance to a better account.

[Anonymous]

Hi KB! Good to have you back! How's your vacation?

I'm hesitant to call them up. I tried planetfeedback with Fleet (if you recall, they were the first to increase my rate from 9.9 to 19.9), and it didn't work. With First USA, I'm even less confident. The Amex chargeoff (which caused this mess) has a high balance, and that is probably why Fleet didn't budge. First USA used Experian, which probably has my worst score .

If I reject the rate hike with First USA, do you know how this will affect my score? I guess it will show as me closing the account. At this point, I'm not sure if I should reject it (close it) and pay the balance off at the old rate within a few months, or if I should keep it open (accept the rate) and just transfer the balance to a lower rate card.

[kb9tbq]

It does not hurt to try, if the planet feed back did not work, then try calling directly into customer service and asking again, no harm in that what so ever. You can call as often as you want, until you understand fully what their stance is and why. They owe you that much to explain themselves, so don't worry about that part one bit.

On the closed account issue, I would ask them exactly how it will show up on the credit report if you reject the rate increase. Meaning will they show it as closed before the balance is paid off, or if they will hold back reporting closed until the balance is zero. Then from there depending on their attitude to help you in this matter - you will know how you want to deal with this company.

If you can balance transfer - then leave the account open for say 6 months - then call back again to see if they will reconsider reducing the interest rate. Unless you are paying a yearly fee for the card, it should do no harm to just leave it open & continually call them every few months for a review until they cave in to reduce the rate.

But if you find them to be totally rude on the matter, then that is where I draw the line and take my business elsewhere regardless of the credit scoring issue. Initially it will look negative with the close status verses a balance, but that will go away once the balance is down to zero.

Use them yet if you can, to keep open and just age the account to help the score, that way they don't get your business any longer, but you get to feed off of them.

[kb9tbq]

Nice to be back, vacation was nice, but missed everyone.

Wish we could find a way to shutting down these creditors that are abusing their rights to just increase rates on the interest when they know their customers pay with no problem.

Keep wondering what happened to being rewarded individually for good relationships with each of them individually. Never ending with what they try and get away with these days.

How are things going with you so far, any improvement in your efforts?

[Anonymous]

The state code refers to an "effective rate" this is not the rate you are being charged. The effective rate is what a credit card company can charge you if they were to charge you for fees and fc's. It will change from month to month depending on how many days are in your billing cycle. Also, First USA gave you an opt out date that you can close your acct and still maintain the current rate you are or were being billed at. At least they gave you the option to opt out. Many credit card companies are not giving you this option. There is nothing illegal about this. Federal law states as long as they give you 15 days notice before they hike it up, its legal. May 29 issue of the New York Times, business section had a really good article on this. Legislators are becoming involved in this common practive among credit card companies. Look to the end of the year for some changes.

[Anonymous]

<blockquote>Originally posted by kb9tbq

Nice to be back, vacation was nice, but missed everyone.

Wish we could find a way to shutting down these creditors that are abusing their rights to just increase rates on the interest when they know their customers pay with no problem.

Keep wondering what happened to being rewarded individually for good relationships with each of them individually. Never ending with what they try and get away with these days.

How are things going with you so far, any improvement in your efforts?

</blockquote>

Hi, KB! Things are at a standstill now with my case. There has been a development in my case that seems to be not favorable for me. But, I won't know for sure until I contact an FCRA attorney. Yeah, I've decided to go with a different attorney because I really need someone who knows this stuff well. I felt that my old attorney would require more time to educate herself on this stuff before she can represent me, and I just don't have the time or money for that. Honestly, I felt many times that she was more on their side than mine. That's certainly not a good sign!

It has definitely been a rude awakening for me. I never knew that creditors would trust error-prone credit reports more than they trust my history with them. With First USA, I've had my card for over 8 years, and not one late!! Now, they treat me as if I was delinquent! I mean, what's my incentive to be a good client if they won't treat me like one?

I'll keep you posted on my development, KB. Again, welcome back!