For Changes in Credit Card Terms, Expect Only One CIT Notice

   DEFINITION OF CIT

In the credit card industry, CIT is shorthand for Change In Terms. Prior to a CIT date on which new terms go into effect, a credit cardholder is supposed to receive written notice of the CIT in order to give him  a  chance to “opt out” of the new - and what may be  - unfavorable terms. 

REALITIES OF THE 15-DAY NOTICE 

Right now, the law says that written notice must be provided 15 days before any changes go into effect in order for the consumer to have time to adapt to them. (You’re either laughing or swearing, aren’t you?)

While those who drafted the law may have intended for the consumer to receive the notice a full fifteen days ahead of time, the fact is that the notice may only be printed out fifteen days before the changes go into effect and then mailed God-knows when, since you will never find a dated postmark on these bulk-mailed envelopes.

As a result, there have been instances when credit cardholders have either 1) not received their notices until after the rate change has taken effect, or 2) had only a couple of days left in which they could take advantage of the “opt out” clause, especially when the arrival of those letters coincided with vacations, hospitalizations or other disruptive events.

Yet once that opt-out date passes, the credit cardholder is out of luck. The new rates go into effect and there is no getting out of them unless he can either pay his balance off in full or transfer all his balances to a lower-interest card elsewhere which, in this financial climate, is becoming more difficult.

It is probably no news to anyone at this point that credit card lenders are changing millions of customer’s terms right now. This means that the interest rates on tens of millions of customer accounts are being increased and, in some cases, increased dramatically. 

COMPANIES WORK ON MINIMUM OF LEGAL COMPLIANCE 

So, in times like these, the public needs to be aware that credit card lenders work on absolute minimum of legal compliance when  it comes to informing their customers of such changes.

This means that you will receive one letter and exactly one letter, and it will will, most likely, tell you that you have only fifteen days from the date of that letter before the changes go into effect and/or your opt-out option expires.

THE TYPICAL CIT PROCEDURE

Now, the lender I work for follows this, pretty typical, format to give the consumer his fifteen-days notice: the letter is sent out one month (30 days) prior to the date on which the new changes will apply.

What this means is that cardholders are receiving CIT notification letters now, at the end of March, informing them that their rates are going up at the beginning of May and that they have until mid-April (perhaps giving them fifteen days from the time these letters are received) to call the opt-out number to stop the rate increases. 

(A previous post explains the consequences of opting out of rate increases. The cheapest credit card you can get may wind up being the one you have, provided you opt out of any rate increases.)

Now, I bring this up because my employer started this process in January 2009 and, as time passes, more and more customers are calling in about their rate increases.

Some are baffled, some are resigned to these increases in a world-weary way, and some are so incensed that they call me every name in the book (as if I am to blame), but all of the people I speak with have one thing in common: none of them remember getting a CIT notice. As a result, these rate changes are an unwelcome surprise.

EXPECT NO REMINDERS OR OTHER MENTION OF CIT

So this is what I want to emphasize in this post: when your rates are raised, you will receive only one notice.

There will be no reminders. There will be no notice of the impending change in your statements. There will be nothing in your online “offers” in regard to balance transfer deals, nothing in e-mails and nothing mentioned during phone call reminders or sales pitches.

You will get just one letter, period. Miss it and that CIT may hit you like a ton of bricks, as it has so many  others.

My employer is, currently, in the process of changing rates on ten to fifteen million customers during the next forty-five days. Again, there will be no reminders to customers of the notification. Should they mistake the notice for a solicitation and throw it out without opening it, they will claim they received no notice.

Yet, most will have received it, I’m sure, but since there was nothing on the envelope to distinguish it from a million other pieces of mail, they will have ignored it and thrown it away unopened which is, perhaps, what credit card companies expect.

Personally, I would like to see ”Danger! Notice of massive credit card interest rate increase inside. Ignore at your peril!” printed in red across these envelopes. (Right. In my dreams.)

So, as a courtesy, I’m telling the folks I speak with, who call in for other reasons, that these changes are coming. My view is that if a person’s credit card interest rates are going from 5% to 18% in less than two months and it’s obvious that he doesn’t know about it, then the credit card representative should tell him.

But this is a personal thing. There is no company policy that says we have to tell customers anything about the changes unless they ask for the information - which they often do, but only after they actually read one of these letters!

CONCLUSION: OPEN EVERY PIECE OF MAIL

In these tough economic times, it is even more important than usual for you to open every single piece of mail that your lender sends you. Amidst the constant stream of promos, pitches and general annoyance, there could be something very important that you need to read.