July 3, 2009
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News: Beehive Credit Union Raises CC Interest
The Beehive Credit Union, Salt Lake City, Utah recently sent letters to their Visa credit card members offering them a new MasterCard account carrying some inviting rewards. The notification was sent with no explanation for the change. In looking at the additional rewards and benefits of the new MasterCard, the switch did not appear to be unreasonable. However, when the members began receiving their initial bills for the new credit card, they soon discovered some very important differences. To begin with Beehive had raised the interest rate nearly four points. Additionally, they moved from a fixed interest rate to a variable rate. The move outraged their credit card members.
Beehive is just one more financial institution that has begun raising interest rates to get a jump on the new credit card reform act that President Obama recently signed into law that will ban these types of deceptive practices. However, Javvis Jacobson, Beehive's Chief Financial Officer, said the move had nothing to do with the new law and that it is part of an initiative that the credit union began last year. According to Jacobson, they have offered the new MasterCard credit card in response to customer inquiries asking Beehive to provide more options. Furthermore, Mr. Jacobson said that customers had been notified of the change to a variable interest rate in a separate notification mailed out on March 5th. Jacobson also maintained that a very high percentage, nearly half, of their customers actually have cards with variable interest rates that are lower than their previous fixed rates.
Other Utah credit unions have given mixed reports on how they are handling the new credit card variable and fixed rate interest issues. A few have said that the new law has motivated them to make a switch from fixed to variable. However, they also say that their variable rates are lower than most fixed rates. A small number of credit unions have said they are putting off making any switch from fixed to variable until they see how things play out. alerts.