How to Avoid Credit Card Interest Rate Hikes

Interest on credit cards usually ends up doubling or tripling the cost of the items placed on the card, no matter what rate you are paying. However, if your credit card interest rate gets hiked up, you can expect to pay even more for the items you place on credit. Currently, credit card companies can raise your interest rates without much warning; however, since the Credit Card Bill of Rights was signed by President Obama, some relief is built into the law. Even though the law will try to assist with this problem, your best recourse is to try to avoid getting into a position of having the interest rate increased in the first place.

So, as a consumer what can you do to avoid credit card interest rate hikes? There are many different things you can do to diminish the chance that your credit card issuer will increase your rates. Several of those ideas are listed below.

Difficulty: Moderate

Instructions

1. Pay Bills on Time: One of the best ways to avoid a rate increase is to pay all of your bills on time. Credit card companies review credit reports regularly, so ensure all of your bills are paid on time or before the due date.

2. Pay More: Pay more than the minimum amount due when making your credit card payment. For some people, this may be nearly impossible to do; however, even a few dollars over the minimum will count towards improving your credit worthiness.

3. Be Informed: Make sure you read the fine print with your credit card and all the subsequent mailings. This becomes very important because your credit card company may chose to inform you of a rate increase and you only have a limited time to respond to the increase in rate. You can look for interest rate changes, over the limit fee changes, late payment fee changes, and any other changes.

4. Negotiate with the Credit Card Company: Call and negotiate the interest rate increase with your credit card company. Remind them the length of time you’ve been a valued customer, if you’ve made your payments on time, and if push comes to shove, that if they don’t consider lowering your interest rate, you will switch your account to a company who wants your business and will do so.

5. Switch Your Account to Another Card: After you make the call to your credit card company, be prepared to switch if they won’t work with you on a mutually acceptable interest rate. There is so much competition out there for credit card business that there really isn’t any reason you need to pay higher interest, especially if another company will give you a better rate.

6. Once the full intent of the Credit Card Bill of Rights is enacted in 2010, credit card companies must follow a set of rules intended to look after the customer. But until then and even after, you should stay knowledgeable about your credit cards, their rates, and terms.

Tips & Warnings

• Use Bank Rate in the resources to check out interest rates for different credit cards.
• When making your decision about switching, don’t forget to factor in transfer fees.

Resources

• Bank Rate - Credit Cards

[jenng]

on 9/4/2009 Great article 5*

[goodselfme]

on 9/2/2009 I learned from you how to avoid credit card interest rate hikes

[ljstraight]

on 8/16/2009 Great things to remember. 5 stars