Would this behavior be legal for a lender to do today?

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MemberSince99
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Would this behavior be legal for a lender to do today?

Postby MemberSince99 » Sat Jun 15, 2013 7:29 am

I was reading about someone who got CLD'd on his Chase cards. He was carrying some high balances and it must have freaked them out, so they CLD'd him to limits just barely over his balances. From there you have to worry they will balance chase you to the bottom then close, but that's another story.

My question is - is it legal for them to cut your limit to BELOW your current balance, THEN scream "Gotcha!!!!!" and charge you for being over your limit and jack your rate up?
Going a step further, I don't carry a balance, at all on anything, ever. But obviously I use the cards. Would they also be able to say let me charge a couple of items, that puts me at 1500 of my 5k limit (like I did last month, I charged over 1600 on CSP but paid it off immediately) THEN quick drop your limit to 1k and scream you are over and nail the hell out of you with penalties for going over your limit? I mean that's extremely unethical distasteful behavior that would result in me immediately ceasing use of the card, paying it then closing it, but is it legal? There is a difference between ethical/moral and legal. I'm thinking that may well be legal since they are free to change your limit at any time. The question is, can they then claim you went over your limit and charge you fees for that, trying to blackmail them out of you by the threat of damaging your credit, even though you did nothing at all wrong. I have read stories of people who carried a balance, but it was below their limit (though not very much below it). The bank would cut their limit to below their balance then charge them overlimit fees. They would do this on a monthly basis, so in addition to 29% or so on the balance they also earned about 30 bucks every month on that as well. Of course they only did this to people they knew were basically toast and they wanted to get rid of anyway.

Maybe I think in a way that's too paranoid, I'd just like to know. I will say, I really believe in my heart it's a huge mistake to put yourself at their mercy by charging anything on that card you can't cover right this minute. That's a philosophy I live by. That way if they jack me over, all I have to do is pay it off, close and we are all done. The thing is, it seems like when you do that (not carrying a balance and paying them off), they don't get spooked or jack you over so you don't have issues.


flan
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Postby flan » Sat Jun 15, 2013 7:53 am

[quote="MemberSince99"]I was reading about someone who got CLD'd on his Chase cards. He was carrying some high balances and it must have freaked them out, so they CLD'd him to limits just barely over his balances. From there you have to worry they will balance chase you to the bottom then close, but that's another story.

My question is - is it legal for them to cut your limit to BELOW your current balance, THEN scream "Gotcha!!!!!" and charge you for being over your limit and jack your rate up?
Going a step further, I don't carry a balance, at all on anything, ever. But obviously I use the cards. Would they also be able to say let me charge a couple of items, that puts me at 1500 of my 5k limit (like I did last month, I charged over 1600 on CSP but paid it off immediately) THEN quick drop your limit to 1k and scream you are over and nail the hell out of you with penalties for going over your limit? /QUOTE]

They have to give you notice (45 day, I think) before charging an overlimit fee on going over a reduced limit.

MemberSince99
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Postby MemberSince99 » Sat Jun 15, 2013 8:11 am

Ok thanks for the info flan. Is that a result of the CARD act?

flan
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Postby flan » Sat Jun 15, 2013 3:19 pm

MemberSince99 wrote:Ok thanks for the info flan. Is that a result of the CARD act?


Yes. Also, you have to opt into fees for over limit. So if you haven't, and they lower the limit, they can't charge you a fee for it. It does of course look very bad to all your other lenders.

MemberSince99
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Postby MemberSince99 » Sat Jun 15, 2013 5:51 pm

Of course. Good thing I never carry a balance. I was just looking at the most extreme possible case. They would have to be pretty hard up for fees to try to catch you immediately after using the card and playing that gotcha game (I can't imagine it) but it's not even legal.



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