Smart Money: Credit card rate hike legal under contract

Bruce Williams is a national radio talk show host and syndicated columnist.

Dear Bruce: How is it possible for a credit card company to raise a rate when they feel like it? We have this one card we had to use. The rate was very high 24.99 percent. The company raised the rate even higher to 27.99 percent.

I called them and they said it was because they went into our credit history and felt that we are more of a risk. We have paid them on time. We are fixing the problem by selling a couple of properties that we have. I still don't think this is legal. M.S., via e-mail

Dear M.S.: The fact that you were already paying 25 percent tells me that you have some type of undesirable credit history. Otherwise, you wouldn't be paying anything close to that. The question of legality is very easily answered. You are obliged to be governed by the contract you entered into when you got the credit card. I'm sure that in the contract there are a whole bunch of things in fine print that you never read (nor would I have).

One of the variables that many credit card issuers reserve for themselves is if the customer's financial situation changes with regard to default or extra obligations, then the rates can be raised. I think the primary problem here is your past credit.

Dear Bruce: With my father's recent passing we have been going through his personal documents. We have located certificates of stock shares. Can you please inform me as to how I would be able to determine if these are of any value? In addition, if they are of some value, how do I go about selling them? D.F., Las Vegas

Dear D.F.: The copies that you have forwarded to me are issued by a non-listed company, possibly Sub Chapter S. They are the type of shares that one issues when forming a private corporation. On both certificates, although different corporations, the same person has endorsed the shares.

You can find out easily enough if this corporation is still licensed in Nevada. I think you are going to find out that these companies have long since ceased to exist. Perhaps your dad loaned someone some money and they gave this to him as security. Given the fact that they are 17 years old, if the corporations have been dissolved, I think they are no more than curios.

Dear Bruce: My wife died in March after a long battle with cancer. I have three insurance policies on her life for $100,000, $3,500 and $25,000 and have begun processing these claims. I have no credit card debt, and my personal debt consists of a home mortgage and a leased automobile. I am a professional with a good yearly income. We have a son, 14, and a daughter, 11.

How should I best handle this money? I know very little about investing, and I don't want to waste or lose any of it. I would like to consider another home in the future, especially if I remarry. I also want to make sure to prepare for my children's college education. P.S., Georgia

Dear P.S.: Since you've acted responsibly and intelligently, this is money that does not have to be invested for your long-term future. You mentioned that you might remarry. I have no problem with that but I urge you to consider a prenuptial agreement if you do. While it may not be the most romantic notion in the world, a prenup has a great deal to recommend it. It keeps your assets separate particularly since there are younger children and a house involved. You might wish to start learning more about investments.

Read your local financial section every day, take a look at the Wall Street Journal, Forbes, Money Magazine and Fortune. You don't have to read these as you might a racy novel, but it certainly makes sense to become literate in the financial world. The only way I know to do that is to invest one of the most precious commodities you have: your time.

Dear Bruce: I have a credit card that I have never used and don't intend to. I would like to know the proper procedures to cancel this card. Can you please pass on this information to me? E.E., Moline, Ill.

Dear E.E.: All of life's problems should be so simple. Write a letter to the credit card company indicating that you are canceling your account, and cut your card in half. They will be happy to accommodate you since there is no profit for them unless you are paying an annual fee and no reason for you to keep it. I am assuming that you do have other credit cards. If this is your only card, then I would keep it for emergencies. Otherwise, proceed as I have outlined.