Protecting Yourself from Credit Card Interest Rate Hikes

MORTGAGE RATES AND CAR LOANS MAY HAVE BEEN SOMEWHAT IMMUNE TO RECENT FEDERAL RESERVE INTEREST RATE HIKES. BUT MANY CREDIT CARDS HAVE JUMPED. BUSEY BANK`S SUSAN ABBOTT IS HERE TO EXPLAIN WHY CREDIT CARD RATES GO UP, AND WHAT YOUR CHOICES MAY BE IF THEY DO: Q1: When can the credit card company raise our rates? · The answer is in the contract - read the fine print. Issuers can`t change the rates or terms on a whim; it has to be spelled out why and when your rate might change in the contract. The contract also details how you`ll be notified. Q2: What are some of the likely reasons why our interest rate might go up? · You were late with a payment. · You were late with a payment on another debt. However, your contract has to disclose that the issuer can penalize you for your record with other creditors. · Issuer has merged with someone else. The receiving company has the option of changing the conditions, but they have to notify the consumer in advance. · Issuer`s cost of borrowing money has increased (again it must be spelled out in the contract). · Any other reason disclosed in the contract. Q3: What other credit card trends are out there? · Predictions are you`ll see fewer and fewer 0% teaser rates and balance transfer offers. Companies will use other types of rewards like frequent flyer miles and goods and services. · Rate changes depend on which card you have and what the rate is now. Many big issuers calculate different rates for individual customers. · Fixed rate cards are not necessarily fixed. An issuer can raise the rate as long as they notify you in advance. Read those statement inserts! · Issuers may be looking at converting fixed rate accounts to variable rates, switching consumers now, while the rate might be basically the same. Q4: What are our choices if the rate goes up or our terms are changed? · Call the company and try to negotiate a better deal, if your fixed rate has gone up, or your variable rate is increasing faster than the prime rate. · If that doesn`t work, see if they`ll allow you to pay off the debt under the old rate, if you agree not to use the card. You`ll need to notify them in writing and if you use the card, the new terms will automatically take effect. · Shop around for a better rate, and pay down that debt.