Crunch or Be Credit Crunched Pt 2: An actual letter from "CityBanc"

In Part 1 of "Crunch or be Crunched" we discussed the CARD ACT, what it is and some of the changes we have to look forward to. If you missed it go here.

I wanted to address the letters that the card companies have been sending out. I got this one from "City" and it basically states:

Dear Quest,

We are making changes to your account terms.
To continue to provide our customers with access to credit, we had to adjust our pricing. The terms of your account will be changing.

Changes include:
- increase in the variable APR to 19.99% (currently at 5%) for purchases.
- increase in the variable APR to 29.75 if you default.
- increase in the variable APR to 25.24% for cash advances.
- increase in the transaction fee for balance transfers to 5% of the amount of the balance transfer.
- increase in the transaction fee for cash advances to 5% of the amount of the cash advance.
- changes take effect December 29, 2009
- if you do nothing, you accept the changes

To accept the terms do nothing and earn interest back every month if:
1. Your payments are on time every month.
2. You charge $500 or more in purchases every month.

Earning interest back = a credit on your billing statement equal to 10% of your total interest charges on your PURCHASE balance.


You have the right to Opt Out.
If you do opt out

you can pay down your balance under your current terms. If you opt out, you may use your account under the current terms until the end of your current membership year or the expiration date on your card, whichever is later.

How to opt out:
Call or write "Citybank" by December 28, 2009.

Opting out:
- your account will be closed
- you will not have access to credit
- you must repay the balance under the current terms
- you will not be able to earn rewards
- you will lose any rewards you have accumulated

So what does it all mean? Join us in part 3 as we break it down for you.