How Will a Short Sale Affect Credit Card Interest Rates?

Your credit card interest rate may increase after a short sale.

If your lender agrees to a short sale, it is agreeing to permit you to sell your home for fair market value, but for less than the amount you still owe on the mortgage.

Risks

A short sale may cause your credit card provider to consider you a higher risk for defaulting on the credit card, which in turn may prompt an increase in your interest rate.

Time Frame

All credit card companies are required to notify card holders 45 days in advance before raising interest rates or making any other changes to a credit card account.

Considerations

You cannot hide a short sale from your credit card provider. A short sale will appear on your credit report, and credit card companies regularly review their customers' credit files.

Options

The CARD Act gives you the right to refuse a higher interest rate by closing the account and paying down the balance under your original interest rate.

Warning

A higher credit card interest rate due to a short sale can cause your card balance to increase rapidly. This can lower your credit score.

References

• AOL Real Estate: Understanding Short Sales
• MSN Money: Credit Card Rules
• MyFICO.com: What's in Your FICO Score?

Resources

• BetterBudgeting.com: How to Negotiate Lower Interest Rates