subject: What Is Your Credit Card Company Doing To You? [print this page] Credit cards companies are raising rates on consumers. And I mean REALLY raising rates, sometimes even doubling them. People are reporting that even though they habitually carry low balances, always pay on time, almost always pay more than the minimum, and still have good credit that they are really getting hit hard with interest rate increases and other fees.
Apparently people who have revolving balances and low rates are big targets. Even people who have long standing relationships with their credit card companies are vulnerable, particularly if they have low rates. Additionally, my research seems to indicate that people who live in or near areas with high home foreclosure rates are at more risk.
What Your Credit Card Company May Be Doing, OR "Any Time, Any Reason" Interest Rates Increases and Account Changes
Lines of credit are being slashed.
If you are late by even a day or so your rate can jump to incredibly high levels.
Interest rates are going up.
What To Do When Confronted With These Increases
Your first instinct might be to close the account. This may not be a good idea as it can hurt your credit score. You can easily see a 100 point drop in a credit score from closing an old credit card. By removing that card your credit history looks shorter and can damage your score.
Don't spend more each month on your credit card than you can afford to pay off. If you are paying your card off each month these increases won't affect you financially. They are offensive to be sure, but if you do not place yourself in a position where you have to pay these exorbitant rate they won't bother you.
Pay your cards off, put them in a drawer and use your Debit card or cash for daily purchases. Keep your credit cards for emergencies or large ticket items.
Call your credit card company immediately after receiving one of these notices. While it seems unlikely that they will reduce the new higher rate, or even restore your previous interest rate, they may be able to put you in a different product that is not so expensive.
Shop around! There are at least 6,000 credit card companies in America.
You can "Opt-Out" of the new interest rate. Unfortunately this means that you essentially shut down the use of the card and continue to pay it off at the current rate. It doesn't mean the balance has to be paid off all at once. I can be paid down over time but any further charges made on the card would likely be subject to the new interest rate. You would really need to have a long conversation with your credit card company about this option before you decide to do this. Be sure to make notes, date the note and get the full name of the person you spoke with.
If this has happened to you please let share your story and what you did about it so we can help other people get out of this mess.
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