Last week I received my monthly Sears Credit Card Statement. The interest rate for regular External and regular Sears purchases had increased from 12.74% to 21.99%. I have an good credit rating and have never been late on a payment. When I called the 1-800 number, I was told there was a change in terms agreement mailed out in January.
The prime rate is currently 3.25%. The discount rate is currently 0.5%.
Today I receive in the mail from Sears the special interest rate checks.in the fine print at the bottom of the page, it says: 'As of February 1, the variable APR for both regular External regular Sears purchases is 21.24%.' My interest charge was for the month of February.
When I called Sears, I was told the change in terms agreement now says APR is based on the highest prime for the last three months plus 17.99%. December 1 prime rate was 4%, therefore, my rate is 4% 17.99%=21.99%.
If the new terms are as Sears now says, APR should say 21.99% as of February 1, and then 21.24% as of March 1. Sears could not convince me they are not using two different formulas.
Either way, Congress' failure to enact the Credit Card Protection Act has given banks the legal right to loan shark.
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