Fixed Floor Rate?
By Ryan Healy | October 1, 2008
I have a line of credit attached to both my personal and business bank accounts at Wells Fargo. They’re not the greatest source of credit, but they are helpful since they serve as overdraft protection.
Most credit cards and lines of credit have variable interest rates, say Prime +3.9%. Or whatever. As the Prime interest rate fluctuates, so does the interest you pay.
Furthermore, low-interest or no-interest offers are common to attract new accounts and encourage loyal customers to use their credit.
Which is why I was really surprised when I received a letter in the mail from Wells Fargo telling me that a “new fixed minimum APR” had been applied to my lines of credit.
They call this fixed minimum APR a “Fixed Floor Rate.”
For some reason, this rate was fixed at 12% on my personal line of credit and 10.25% on my business line of credit.
Correct me if I’m wrong, but this means that even if your credit score improves, Wells Fargo will never lower the Fixed Floor Rate. After all, it’s fixed!
Talk about whacky.
As soon as I read the letter, I had the distinct urge to call them up and just cancel both lines of credit. And maybe I still will.
Right now, they both have zero balances, so there’s no rush.
How would you respond if you got a letter like this?
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Topics: Credit Cards, Frugal Living |
2 Responses to “Fixed Floor Rate?”
Comments
« As in Business, So in Personal Finances | Home | Outstanding Debt as of September 2008 »
October 13th, 2008 at 4:26 pm
[...] may explain why Wells Fargo recently installed a “Fixed Floor Rate” on my lines of credit — even though I’m an excellent [...]
November 13th, 2008 at 6:50 am
[...] best balance transfer offers I’ve recently received. (I guess this makes up for their nasty fixed floor rate [...]