This time it’s raising interest rates, or doubling the monthly payments. One of our readers, Julie, wondered what she should do:

Hello.
In ’05 I used two personal credit cards as low interest loans for part of my business. They are locked in at 2.9 and 3.9 till there paid off.

My pay back was 2% of the balance. My business closed in July ’07 and I have been paying off the credit cards and have never been late.

In January they raised the payback from 2% to 5%. Making my payments go from $350 to $860 and the other card from $240 to $600. They also added an extra service charge-finance charge of $10.00 per month because I get charged a finance charge.

I called and told them that I could not pay this amount each month and they responded that if I increased my interest rate from 2.9 to 7.9 they would reduce it back down to 2% and drop the extra $10.00 fee. This 7.99 is just for 2 years and then they could charge me anything they wanted.

I owe 17,000 on one card and 12,000 on the other. I don’t want to increase my interest because that would add years to trying to pay this off. Is there anything I can do or say to make them keep the original 2% payback without changing my original interest rates? Thank you, Julie

Hi Julie, thanks for your question.

There are a couple of things you can do that will really help.

The first is to call your credit card company back and tell them you you refuse to agree to the new payment terms. This means that they will close out your accounts, but you might be able to keep the original repayment plan if you do that.

You will have to send your credit card companies something in writing in order to get this started. Send it certified mail with a return receipt so that you have proof they got your letter.

Now, this is an option that is usually used when your interest rate gets hiked for no reason, not when they raise your minimum payment. If there is no way for you to dispute the changes to your account, and your credit card company will not work with you, then you still have another option.

Debt negotiation experts like the one we just interviewed can negotiate on your behalf. This can be damaging to your credit (they will have to close your accounts too) but they can drastically reduce the amount you owe on your credit cards, and put you on a payment plan that will get your debt paid down faster.

It’s a real option – some of these companies are scams, but some of them really help people and I think that your situation is an excellent fit. You want to pay your bills off, you don’t want it to take forever, and you don’t want to pay any more in interest than you have to.

You can start investigating debt negotiation with this site here:

See what types of things they can do to help you, and make sure you understand the process, and how it will affect your credit. Having to do a little bit of credit repair is usually well worth the thousands of dollars a company like this can save you.

CitiCards has been behaving badly too:

A reader, Kevin, wrote in with his story:

I was recently frustrated trying to contact Citicards regarding the security of my account.

They sent unsolicited new cards and created a new account for me (gave me a new number) without any explanation.

When I called to activate the new cards I heard a recorded message that my old account had been “compromised” or the number stolen. This was news to me!

So I called Citicards and was tossed around from department to department, from India to Manilla, and from no one could I learn which merchant had their system hacked or how my number had been identified as at risk.

As a consumer I wanted more information, but ran into a kind of wall that insulates consumers from anyone at Citicards who actually knows what is going on. Any ideas?

Kevin,

Thanks for your question. Unfortunately, this sort of stuff happens all the time, and it doesn’t surprise me that you’re getting te run-around. Shame on CitiCards for running you around. I would be just as angry as you are in your position. If your personal information was compromised because of them, then you deserve an explanation.

Although, If I were in your shoes (and I have had my identity stolen) I wouldn’t wait on CitiCards for answers.

My recommendation is for you to temporarily pick up a credit monitoring service with identity theft protection. There are several reasons I suggest this:

• Any time your personal information has been compromised you need to check your credit reports - Since you don’t know what happened, or what sort of information was stolen (just your credit card number? Name, address, social??) you need to be sure that no one is opening up new accounts in your name.
• You need to verify that the old account was closed, and that the new account is reporting correctly - With CitiCards behaving this badly it never hurts to check that they really did close out that old stolen account. It may take a month or two for things to get changed over on your credit reports, but make sure they do!
• Credit Monitoring / ID protection services offer insurance – Identity theft insurance can come in very handy, especially if you know that some, or all of your personal information might be floating around out there being used.

Some people like LifeLock for this, but I prefer Identity Guard from Equifax. For one, it’s cheaper, and two, I think it does just as much – except that it doesn’t automatically freeze all of your credit reports.

To my mind, freezing all of your credit reports is a hassle unless you know that your entire identity has been stolen. Identity Guard lets you freeze and unfreeze your reports with a click, but they give you the option instead of doing it automatically.

Their identity theft insurance is excellent as well, it was actually fun to read the fine print. It’s about $15 / month, so it’s not outrageously expensive, and you get to monitor your credit report too.

Whatever you do, make sure you pick up some sort of identity monitoring program, at least for the next three to six months. It’s bad enough that Citi gave you no warning – identity thieves will give you even less, and it could be devastating. Make sure you look out for yourself in this situation.

Here’s the links you can check out:

You might also want to check out this article, which has some really good advice:

Thanks for your question!

Have a question for us? Leave a comment below!

Keep Reading:

• In Case of Identity Theft, Check Your Criminal Records
• Fraud Alert vs. Freezing Your Credit Report
• What To Do If Your Purse Or Wallet is Stolen