Last week I refinance some of my debt.  I’ll be upfront and honest, I have a lot of debt.  I maintain that did very well and with one exception I never miss a payment’s.

Last month I received a bill for more my credit card companies, one of my best credit cards had increased my interest rate to 20%.  That is too high.  The day after I received the bill I received an offer from the same company to perform a balance transfer from other credit cards to this 20% card at a fixed rate of 4%.  I suspect is an error by the credit card company and raising my rate so I gave them a call.

I asked them why the rated increased and it was a mistake.  After being transferred through three times, I learned that they had increased my rate due to my overall debt balance on all of my accounts.  There are many reasons why credit card companies will increase your rates, this one highlights the fact that they use your credit reports and your credit history to continually reevaluate the interest rate they should charge you.  The timeliness of your payments does not always work as the sole item contributing to the interest rate you pay.

In general they have to continually monitor how risky you are to them.  For this they use a combination of their own personal history with you and on your accounts, and external information provided by credit reporting agencies.  In my case the external information caused an increase in the rates.

So this triggered my call and that led me down the path of refinancing part of my debt.  I’ll discuss more factors about the refinancing in a future article.

This entry was posted on Wednesday, May 16th, 2007 at 12:48 pm and is filed under Credit Improvement, refinancing. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.