Ana of DebtFREE-Revolution this with her post about Bank of America’s most recent rate-jack. You see, BofA is allowing people to avoid the rate jack as long as they opt-out via the letter they’ll receive AND stop using the card and just pay off the balance (they can make minimum payments and accrue the old interest…after all, the company would rather get some interest than none).
What’s important to know is that if you opt-out*, your account is still eligible for rate-raise if you accidentally use it. Maybe you’ve forgotten that you have your cell phone bill automatically paid on this account.
If the new transaction is made (by you or automatically) your rate will rise and your entire balance will be at that new rate. You could try calling the company and saying that you forgot and it was an error, but your odds of them letting it slide are pretty low. After all, it’s a legitimate charge you authorized and that’s your responsibility.
1. If you don’t carry a balance (and hopefully you don’t), treat this as a greater incentive to pay it off on time. Or find a card with lower rates elsewhere if you’d like.
2. If you have good credit, get approved for a 0% balance (or low%) transfer card elsewhere. Transfer the balance onto it, cancel the old card* and DON’T put any more of a balance on the transfer card (reasons I’ll get to in another post, but it involves interest).
* Don’t cancel the card if it’ll affect your credit score. For instance, it might be your oldest card (valuable) or your only card (again, affects your score). But if you have several and it’s not your oldest, consider it…
3. Opt-out and pay it off (get a new CC elsewhere). Go through your old statements. Look for any automatic billing. Put those on a bank account/debit card/other credit card. Check places like Amazon/web-hosting/etc and reset your payment information.
Then, cut up the card or consider freezing it in a block of ice or putting a huge NO on it.
*This isn’t just BofA, it’s pretty standard with credit card companies. So whenever you choose to opt-out and pay it off instead of canceling and walking away, be sure to double check you’ve got all your bases covered so that you won’t get any new charges!
As always, MM is not a finance professional, these are just her musings and ideas on the situation and should not be construed as advice. Consult your credit card company if you have questions about their policies and the loopholes.