Expert: Yan Ross - 10/21/2009

Question
QUESTION: I have 2 credit cards, a visa and mastercard. The Mastercard is with Chase and I just got notice from them that the APR will now be a "variable" rate...the 'prime rate' plus 16.99% which right now would be over 20% according to them. I usually pay my bill in full every month so it's not a big issue except for those times I do need to pay something off, like a Dr. bill or car repair. But I have 2 questions please. Do you know if this is a trend and other banks will be going to a 'variable' APR? And, I've had this card for 20 years and don't even remember how I got it, if I want to close my account with them and get another Mastercard at a more reasonable rate, where should I go?  Thanks

ANSWER: Hello, Lee!

This is a time of great change in the credit card industry -- there are no easy answers to your questions.

But I can give you some suggestions about choosing to keep the card you have or shop for another one.

It appears you are satisfied with the Visa card and the issuer (so far).

There is a "trend" for credit card issuers to find ways to extract more money from people like you, who have earned an excellent payment history and usually pay in full each month (which usually earns less for the card issuer).

I would suggest that you compare the features of your Chase M/C with those of competing cards.  You can check online at several comparison-shopping web sites -- just "Google" "credit cards" and you will find there are many of them.

Consider such features as whether or not there is an annual fee, rewards (miles or point or cash-back), how much you want/need as a maximum line of credit, and similar features.

There is some value to having a card for a long time, especially since your credit reports will show a long payment history.  And there is no reason you have to close the Chase M/C even if you do apply for another one.

Be aware that you can affect your credit score when you change credit cards.  Adding to your available credit (by opening a new credit card account) can increase your credit score.  Closing an existing account without replacing it can lower your credit score.  This is true because such actions change the ratio nof utilized credit to available credit.

I hope that helps you make a decision that works for you.

Good luck!



---------- FOLLOW-UP ----------

QUESTION: Ok, thanks. I called Chase and they said the new variable apr rate has nothing to do with me paying in full most months, other banks are starting to do this, and more customers than less will be subjected to this, it's due to the "economy." Whether or not all that is true, I don't know. But as far as getting a different Mastercard (I wouldn't close the one I have), I rather not apply online, I saw cards online from Capitol One and Citicard but still don't know exactly where I'd go in person to inquire and get one, one of the large banks? a credit union?   Thanks

Answer
Lee,

I expect the "customer service representative" was reading from the script or talking points provided by his/her masters at Chase.

You can always go online and find a toll-free number for the card issuer you select, and ask them to mail you the application.  That way you would not have to enter your info over the internet if you prefer.

You didn't say where you live, but there are probably bank of credit union branches nearby where you could go in person to apply.

From your description of your credit history, you should have no problem getting a new card opened.

Hope that helps.

Good luck!