Vision Credit Education, Inc.

Credit card issuers are increasingly raising interest rates due to perceived financial weakness of their cardholders. Many consumers have complained about changes to their credit card accounts with almost no prior notice. There is a way to stop the increases.

Rate Hikes and Credit Limit Reductions

The actions that many cardholders are experiencing can be a double blow to efforts to repay debt and still afford to make other monthly payments. Credit card issuers reserve the right to change the terms “any time for any reason.”

Reductions in credit limits can prevent usage of the card in emergency situations. There is little that you can do to stop that, other than to rapidly pay down the balance.

Interest rate hikes can be stopped, if you act quickly enough. You may only have 30 days to protest the changes, although some creditors may allow requests beyond that probationary period.

Opt out of Account Changes

If you notice that your credit card interest rate has skyrocketed, immediately contact your issuer to find out the reason for the increase. Rate hikes can cause interest rates to go from as low as 7-12% up to 28% or more.

Sometimes the rate may be increased because you were labeled as a slow pay cardholder. If this is the case, promise to make higher than minimum payments and demand your original rate be restored immediately.

For most cardholders, this rate may come as a shock because they have had no missed payments or other obvious signs of financial weakness. The card issuer may have simply become uncomfortable with total debt levels.

To opt out of account changes, you must generally contact your credit card issuer within 30 days of the statement date. Inform the card issuer that you are refusing the changes to the account. The card issuer will allow you to repay the existing card balance at the previous interest rate until the balance is repaid in full. Your charging privileges will be revoked, but at least you can save money on finance charges.

If you truly want to keep the account, there is a trick. You may contact the creditor prior to making your final payment on the balance and request to reactivate your card. You may even negotiate a new interest rate if the card issuer allows for you to reactivate the account.

Knowing the stipulations that accompany credit card interest rate hikes can help you avoid unnecessary increases in your finance charges. These steps can save you hundreds in additional interest if you act quickly enough!