As some credit unions have changed from fixed rate cards to flexible rate cards to protect themselves from possible interest rate risks, they have faced some push back from members unhappy about the change.
One member of the $7.2 billion The Golden 1 Credit Union, headquartered in Sacramento, wrote Credit Union Times about how unhappy they were with the change.
"I am enraged over this. I would actually understand if the change applied to new charges only, but that is not the case. As upset as I am over this, I could only imagine how angry a new Golden 1 customer would be had they specifically switched to Golden 1 because of the recent campaign to entice consumers to leave their current banks for Golden 1."
Teresa Halleck, CEO of the credit union, responded to a question about the member's message by pointing out that the new law allowed card issuers to change interest rates on existing balances provided they went to a variable rate system where interest rates are pegged to an external index. She also pointed out that while The Golden 1 had moved to a variable rate system, it had not actually changed its member's rates.
"Members current in their credit card payment obligations will see no immediate change in their interest rate as our pricing change to variable rate was intentionally structured to ensure these members continue to have the same interest rate at the time this change takes effect as that currently offered under the fixed-rate term," Halleck wrote in an e-mail response. "This consistency in interest rate at time of transition is of benefit to our members in contrast to many financial institutions that have already raised the interest rates and fees applicable to their credit card offerings," she added.
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