Tips on How to Fight and Beat an Interest Rate Change
The problem faced by consumers currently is the lenders' response to new credit card regulations that begin in 2010.
With those new rules in place, lenders will no longer be able to increase your credit card interest rate without a good reason and will not be able to increase the rate on the balance unless you default on your payments.
The current law requires lenders to give only 15 days notice before increasing the interest on a credit card. These notices are small flyers with tiny print that look harmless and are often included with a special offer or checks to sign for cash advances.
The lenders know you will not be happy to find your interest rate has changed from 12% to 33% so they send a notice you may not bother to read. Other lenders do not raise the interest drastically but simply increase it by a small amount each month.
If you have an 18% rate of interest on your credit card, the change to 18.25% might not seem like much and is easy to miss on the statement.
If that one-quarter percent increase occurs month after month, it won't be long before you have a credit balance with a high interest rate!
What Can You Do?
So, how do you fight an interst rate change on your own? The first thing most of us do is call and ask why the rate has changed.This seems a logical step but the answer from the lender will almost always be the increase was based on information received from the credit bureau. This is a polite way of saying "none of your business".
Next, you may request a copy of your credit file. You may find a negative report has been filed that has lowered your credit rating. Many consumers find that there are no visible changes in their credit file that explains the lender's action in raising interest rates.
If you have a good credit standing, there are ways around the interest rate increase. Check your mail and it's likely you will find several offers for new credit cards at low introductory interest rates.
Some may even offer 0% interest for six months to one year and also may waive transfer fees for a new credit account. This is your best option and can be used to negotiate with your current lender or to use as an escape route if your lender refuses to negotiate.
Call your current lender to discuss the change in interest rate after you have checked your credit report and looked for low interest offers available. You are armed with information that will refute any argument of changed rates based on credit rating information.
You will also be able to inform the lender that if your interest is raised, you will immediately act and transfer your balance to some other place. This will only work if you can qualify for one of those new low interest introductory rate credit cards.
What is The Other Option?
The other option is to stop using the credit card immediately. Cancel any recurring payments made with the credit card and put it away. Call the lender to state that you are not accepting the new terms and will discontinue use of the card.
The lender must allow this as your use of the credit card after a rate change indicates your acceptance of the new rate. If you decline, you will be able to pay off the credit balance at the original terms making monthly payments as you did in the past. Once that is paid off, the account will be closed.
Good Credit Does Not Protect You
Credit card lenders are increasing interest rates for thousands of account holders. Knowing what steps you can take when (if) the lenders raises the interest rate is very important and crucial for your personal economy.
Don't accept an interest rate that will double or triple your payments and put you in the poor house. Instead, apply everything you have learned here and jump into the interest rate battle and show the lenders that you will not give up so easy!
Don't miss our guide on debt elimination even if you are not currently buried with debt!