My Credit Card Rate Got Increased. What Should I Do?
Credit card companies may be taking advantage of consumers again--ahead of credit card reform laws set to take effect in February 2010. Millions of Americans are being notified that their credit card rates are being increased. For some people, this may not be the first time they've had a surprise credit card rate hike during this recession.
So what should you do if you get a notice that using plastic is going to cost you more interest? Here are some tips for handling a rate increase.
- Avoid panicking so you can make the best decision. Decide if you really need to keep your credit card or if you can get by without it. It's not a good idea to rely on credit, so a notice for a rate increase could be the motivation you need to finally stop using credit cards
- Choose to opt out if you no longer want the credit card. Opting out means the credit card company is going to close the account, so you won't be able to make new charges. If you have a balance on the account you're still responsible for paying it off under the old terms and conditions. You can opt out by phone or by writing a letter
- Call your credit card company to see if there is any way you can keep your current rate. Mention that you have been a long-time customer who has paid bills on time (if that is the case). Chances are your card issuer won't budge, but at least you can be confident that you made an attempt to protest the rate hike
- If you plan to accept the rate increase, read through the new terms and conditions carefully. Continue making payments on time to avoid having interest raised to an even higher default rate
- Use your card as little as possible to have a better chance of paying down existing credit card debt. Even a small interest rate increase can result in a significant change in your monthly payments, and add up to hundreds or even thousands of additional dollars in interest paid over time
- Pay more than the minimum monthly payment. Sticking with the minimum payment keeps you tied to your credit card debt much longer than if you pay extra each month
- Shop around for other credit card deals. You may be able to find balance transfer credit cards with much lower interest rates and favorable terms and conditions
Don't feel powerless because credit card companies continue to make things difficult for customers. It's your decision to accept unfair changes to your account or to take your spending power elsewhere.
Published 01/06/10 (Modified 11/20/13)