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Dealing With Debt: Interest Rates & Fees |
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More Ask Susan |
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I'm hoping you can answer a quick question for me. Are there any statutes that govern a situation where a collector demands the remaining principal, plus interest at the rate of 22 percent interest per year? Aren’t there usury laws against charging this much interest? Thank you in advance for answering this question. -Rose |
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Dear Rose,
I am not an attorney, but I will try to answer your question to the best of my ability. It is my understanding that some states do limit the amount of interest a creditor can charge. However, creditors can charge as much interest as the law in their state of operation allows—even if you do not live in the same state. For more information on your state’s laws, contact your local consumer protection office.
The Advice Team |
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I have a credit card that was reported as a "charge off." Out of nowhere, I received a letter from a collection agency that states this account has been accruing interest. They are now demanding an obscene amount of money or they say they will sue. Can an account that has been charged off still accrue interest? -Shawn |
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Shawn,
If your contract with the creditor does not set the interest rate, state law dictates how much interest a collection agency can charge prior to obtaining a judgment. To learn your state's laws, contact your local consumer protection office. For a list of state and county consumer protection offices, please visit the Federal Citizen Information Center's website at http://consumeraction.gov.
The Advice Team |
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I need advice. I am 26 and have NEVER been late on any of my credit cards. I have established credit and have always received very low rates. My main credit card company that I have had for years at a 7.99 percent changed my rate within one billing cycle to 28.99 percent. Last month I was charged $35 in interest and this month, $190. When I contacted them I was told about a notice I received and that the rate was raised based on my credit report. I do not get how a company could do this. I thought 28 percent was for delinquent accounts by 60 days or so. -Elizabeth |
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Elizabeth,
One of the most common triggers of a rate increase lies in what is called the Universal Default clause. Basically, this clause permits your creditor to raise your interest rate, or even close your account, based on your overall credit situation. You should have the opportunity to close the account and keep your current interest rate. Contact your creditor for information.
The Advice Team |
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I've worked very hard at cleaning up my debt. I have one debt left to pay that's showing outstanding on my credit report. The last payment I made to the company brought my balance down to $691. The collection agency handling the account is saying I have an additional $200 to pay claiming it's interest. I want to pay what I owe to pay the account in full, but I don’t want to pay these interest charges. What would you suggest I do to make good on this bad debt? -Lee |
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Lee,
You could try to negotiate. Be sure to request that the account be shown as "paid in full" on your credit bureau file. Don’t forget to get all the details of your agreement in writing. For more information, see the section on settlements.
The Advice Team |
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