Cardholders stunned by actions

Chicago Tribune

CHICAGO — Wilma Erwin is fuming.

Despite an 18-year track record of paying her bills on time, the retired principal got a notice April 15 from Discover Card that her card’s 10.99 percent rate will jump to 15.24 percent.

“It made me angry, and that’s unusual for me,” Erwin, 64, said of Discover’s rate increase. “It’s against everything that America was built on, saying to the valued customer that you get the slap with everyone else who’s not paying their bills.”

The Garrison, Ky., resident said she plans to pay off the $2,079.98 balance and, unless Discover continues to honor her current rate, will cancel the card and seek a better deal, or just use an existing Chase card as her family’s main card.

Discover Financial Services is among 540 institutions that received money from the U.S. Treasury Department’s Troubled Asset Relief Program. The program’s goal was boosting capital levels of financial institutions and thereby easing lending. Discover received $1.2 billion March 13.

Other recipients include Bank of America Corp., which has collected about $45 billion in government aid and which has also raised interest rates and cut credit lines on some cards.

The interest-rate boosts and tighter lines of credit have surprised some consumers.

Thomas Charles Kenniff of Naperville, Ill., said he has never missed a payment on his two BofA credit cards and pays them off monthly.

But he recently was told that one card’s credit line was being slashed from $28,900 to $14,500 and another from $33,500 to $17,000.

The retired lawyer, 71, said a BofA customer-service representative told him that the bank reduced his available credit so he wouldn’t run up any high balances.