Legal Question in Credit and Debt Law in Texas

Arbitrary increase of interest rates

I was issued a Discover card two years ago with a fixed interest rate of 12.99%. In the last six months, Discover has raised that rate, first to 15.99% and subsequently to 19.99%. I have contacted them and they inform me that they have no particular reason for raising the rate other than that the account is reviewed periodically. I was never informed of a rate increase. I have no late payments or underpayments to date, and I would like to know if it is legally permissable for Discover to arbitrarily raise my interest rate? The rate was raised AFTER I accrued a substantial balance of nearly $3000, though this amount is well below my credit limit.


Asked on 6/19/01, 1:47 pm

2 Answers from Attorneys
Michael O'Connor Michael O'Connor, Attorney-At-Law

Re: Arbitrary increase of interest rates

Transfer the balance to another credit card with a lower rate and tell them to stuff their card.

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Answered on 6/28/01, 3:09 pm
Stephanie T. Shipp Shipplaw

Re: Arbitrary increase of interest rates

The answer probably lies in the cardholder agreement - along with the periodic revisions insert Discover sends along with your monthly bills from time to time. You should always retain these and read them carefully - although it is often difficult to do so without a magnifying glass. However, make no mistake, you will be bound by those new terms. The only way you can avoid them is to stop using your card. New terms should only apply to purchases made after the effective date of of the new terms.

Take the time to sit down and read through all of the terms of your account. Then if you find that they have violated those terms, you should take action.

Just from a strictly pragmatic approach, you might follow Mr. O'Connor's advice as well.

Best of Luck,

Stephanie T. Shipp

Attorney At Law

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Answered on 6/28/01, 3:29 pm


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