Read 'em and Weep; Cardholders See Rates Rise Based on Other Debts
Alan Cowan said he's never been late paying his credit card bills. So he was surprised this spring when he opened his First USA bill and found an "important notice" that said in small print that his 9.99 percent interest rate was going up to 19.49 percent.</br></br>No reason was given for the increase, but when Cowan called for an explanation he was told that in spite of his spotless record at First USA, he was delinquent and had high balances with other creditors. Cowan disputed the delinquencies and said that high balances were declining as he paid them off. When First USA declined to change his rate back to 9.99 percent, he closed his account.</br></br>The California computer consultant is one of a growing number of credit card customers who have discovered a not-so-fine reality in the fine print of most credit card issuers. It doesn't matter if consumers are current on one credit card; if they fall behind -- or become too indebted -- to another company, the first credit card firm may, and often does, raise its rate.</br></br>"If we see you're becoming delinquent with other creditors, there's a chance you may become delinquent with us," Citibank spokeswoman Maria Mendler said.</br></br>First USA spokesman David Webster said: "We think it's a prudent lending practice. You must provide your product based on the risk that exists, and if that risk changes, then a lender needs to make changes to accommodate that."