"Back in 1996, I went through a divorce and filed for bankruptcy," Don says. "I was offered a Providian card which was supposed to help repair my credit. It came with an initial interest rate of 19.99 percent. I kept my account in good standing and the rate was lowered to 16.99 percent at one point.
"Suddenly, Washington Mutual took over [in 2005] and the credit card became Washington Mutual. Shortly after, all hell broke loose. My account had been in good standing but I had a late payment. They immediately jacked the interest rate to 21.99 percent. A year or so later, I was over limit so they jacked the interest rate to 25 percent. Then, for a year, my card was in good standing again—all my payments were on time and for more than the minimum amount, and I had no over limit charges. With no warning, they raised the interest to 31.99 percent. This was after a full year of good standing.
"After they increased the interest rate, when they applied the new finance charge it took my credit card over the limit by four dollars, so I was charged a $39 over limit fee.
"I've written several letters and emails to Washington Mutual, saying my account is in good standing and asking for a rate reduction. They just say, 'No. Not at this time. We do periodic reviews of the accounts.' I've asked for a detailed description of these reviews. All I get back is a form letter where they say that 'certain factors' have led to the increases. I've never received a full explanation of the rate increase.
"I once sent Washington Mutual an email to ask if they use universal default and they said, 'No.' That's an outright lie. Why else would my rates go up after having good standing for a year? They do it because they can.
READ MORE LEGAL NEWS
Many credit card customers are investigating the possibility of a lawsuit against their credit card providers, alleging they were subjected to unreasonable and unfair credit card practices, including universal default, unexplained interest rate hikes, and ridiculous over limit fees.