A letter to my loan shark

This week the House closed the barn door as the horses galloped over the horizon, voting to freeze interest rates until a credit card law passed 8 months ago kicks in. The credit card companies have been wallpapering consumers’ homes with notices of increased rates.

Many credit card companies, which had offered no-annual-fee accounts, are now slipping in charges. In many cases, the card companies are trying to “test” how much you love your credit card, and how much money you’re willing to fork over to keep it, according to Marketwatch.

And this week, Pew’s Safe Card Card Project released a study showing credit unions as a far more logical source of credit cards than commercial banks:

In July 2009, median advertised interest rates on cards from the 12 largest credit unions were between 9.90 and 13.75 percent annually, depending on a consumer’s credit profile approximately 20 percent lower than comparable bank rates. Meanwhile, credit union penalties were generally less severe than those of banks.

That was all I needed to hear to write letters to the half dozen credit card companies, whose notices arrived in the mail this week:

To whom it may concern:

Thank you for your notice of the above date informing me that you’re raising the APR on my Discover (Account #XXXXXXXXXXXX) card to 22.9%, raising the APR for cash purchases to 25.9%, increasing the penalty for APR to 29.9%, and the late payment fee up to $39.99.

As you probably know, I pay my balances every month, and am not foolish enough to get cash advances from this account. That should suggest to you that I manage my finances relatively conservatively. I wish you had.

As I understand it, your industry is not raising your fees to confiscatory levels because of new credit laws. That’s just a coincidence. Your industry says you’re trying to recoup massive losses from your customers.

Whatever the reason, during these difficult economic times, I’m sure you understand that I cannot enter into any business agreement with financial institutions that are so clearly in peril. For that reason, I am rejecting the changes per the terms of this account, which we agreed to when you were a more solvent institution.

You are certainly free to close the account, although I can’t say I understand why you’d want to. Customers who use your card, allow you to skim the purchase price from merchants. Customers who pay their bills on time do not seem to be the people responsible for bringing you to the apparent precipice of bankruptcy.

No doubt, when that occurs, you’ll be seeking a bailout from me – the taxpayer. So this letter is to inform you that when that time comes, you will immediately be charged 25.9% for the cash advance, and 22.9% for any outstanding balance each month. Trust me, you don’t want to know the late payment fee. On the other hand, I will offer you the same reward your credit card statement offered me this month: A discount on Beano tablets. Enjoy!

Please be sure I’m taken off the mailing list for your daily solicitations for me to become an account holder again. You had your chance.


Robert B. Collins

  • LK

    Your pen cuts deep, sir.

  • You mean – there’s gonna be some sort of risk involved with offering unlimited credit to people? That must be one of the definitions of Communism or something!

    Seriously – excellent work, hope it gets noticed!

  • Lindsey

    Thank you! and good luck!

    I myself am happy with my credit union membership. After years of being jerked around by Bank of America, Washington Mutual and TCF, discovering my credit union felt like a true safe haven. No more confusing and exorbitant fees! I also got rid of all my conventional credit cards in favor of my credit union card. Reading about all the arbitrary rate increases has made me happy I bailed out years ago.

  • Bravo! I have venting of spleenness envy!

  • Joanna

    I hope you don’t mind if I borrow this idea?

  • momkat

    Wow, I wish I’d written this letter–a masterpiece! I’m happy with my credit union too.

  • Joseph

    A gem of a letter, Bob! I’ve been quietly stewing about this for the past couple months so I may do as Joanna did and borrow your idea!