Financial Literacy

It all started when I learned on Monday that my RBC Visa interest rate had been increased to 24.5% back in September. Further investigation revealed that this penalty was the result of 3 late payments over the period of 12 months.

(A late payment strike against you is levied the day after your 'Statement Due Date.' This strike goes against your credit rating and can hinder any future attempts to get another credit card, a cell phone, a loan, a car, a mortgage, etc.)

After my initial shock, I protested, I pleaded, but - "No, this a 'delinquent' payment pattern," the RBC financial advisor state firmly, "and will require 6 months of consistent payments before the interest rate can be reduced."

There must be something I could do! That evening I complained to Nicholas, who exclaimed, "Aren't there laws against that? 24.5% are what loan sharks charge!"

It was time to take matters into my own hands; my financial illiteracy was costing me too much.

I went back over each Visa statement of 2007, (luckily, online banking allows easy access to electronic versions), and wrote down the date and amount of each payment I made towards my Visa. As the real picture emerged, I became more and more sure in my belief that this was totally unfair! My sleuthing revealed that:

1. I missed Jan and Feb's payments because my balance was $0 or near to $0;
2. For 8 months this year, I had made two payments on my Visa, rather than just the required one;
3. and, that during September, the third 'delinquent payment period' I had made a payment - one day outside the statement period.

At this point, I called the number on the back of my Visa card, and explained the real picture to a very sympathetic representative named Michelle. I added, my voice surprisingly thick with emotion, "A 24.5% interest rate is something a loan shark would provide, and I will no longer bank through RBC if an alternative cannot be provided."

I did it! I stood up to my bank!

"Let me see what my manager can do for you." She replied, gently. "Please hold the line."

I waited 10 minutes, feeling super-empowered and very hopeful.

When Michelle reconnected, Here is what she offered me:

• An immediate decrease in my interest rate back to it's usual 19.5%
  
  
• A $100 rebate for the difference in interest charged since September
  
  
• An opportunity to take advantage of the "3.99% Transfer Balance Interest Rate"
  (Which in a nutshell, means: I first transfer the amount on my RBC Visa to another card ("from another bank", Michelle noted in an undertone) then 4 days later, call RBC and say, "Hi, I'd like to do a balance transfer of $-- from my -- card onto my RBC Visa card." and they'll transfer the amount right back onto my card at a 3.99% interest rate for 4 months!)

I was ecstatic!!

I'm going to pay off as much as I possibly can until April, at which point, I will change my Visa plan to a 11.5% fixed interest rate.

(I also set up a minimum payment to automatically be taken out of my chequing account, so I ensure I never miss a payment due date again!)

Who knew becoming financially literate could be so much fun?!