My Credit Card Raised My Interest Rate! Here’s What to Do
Stories of credit card companies raising interest rates on just about everybody—even customers with perfect credit, no debt, and no late payments—continue to roll in.
That’s because the CARD Act takes effect this winter and will restrict credit card companies’ ability to raise interest rates on existing customers. If you thought credit card companies were committing usury in the past with APRs of eighteen, or twenty percent; you ain’t seen nothing yet. Cardholders are seeing their rates go as high as 29.9 percent; there’s even a story of man who received a credit card offer at 79.9 percent APR!
How do you know if your card is raising your interest rate? What can you do about it?
How Credit Cards Raise APRs
In general, your credit card company must notify you of any changes to your account, including interest rate increases, by mail (or electronically if you have consented to receive legal disclosures online). Unless you pay late. Most cards’ terms and conditions include a clause that allows them to raise your interest rate if you pay late or go over your credit limit; no notification required.
Manage your cards well? You’re not immune to rate hikes.
My wife just received a notification from Citi that her interest rate will jump to 23.9 percent in December. That’s on a card with a $15,000 credit limit that does not have a balance and has always been paid in full. (We use the card for joint expenses each month and pay it in full).
She received a letter yesterday detailing the change. Unlike other rate increases I have seen, however, this notice had an interesting clause. If my wife were to transfer a balance of $3,000 or more to the card (plus a fee), Citi would actually lower her rate to 9.9 percent on the balance transfer and all future purchases until 2011. Obviously, Citi is just trying to make some money off this account. Since we always pay the balance in full and the card has no annual fee, they never get a dime from us in interest.
Just be sure to watch the mail.
A lot of these credit card rate increase notices look like junk mail. But if you miss them, you may miss your opportunity to opt-out of the rate increases.
How to Opt-Out of Rate Increases
When your credit card company raises your interest rate arbitrarily (i.e., not because you paid late), they must give you the opportunity to opt-out. Usually, you must contact the card’s customer service to opt-out. If you opt-out:
- You can pay off the existing card balance at your current (lower) interest rate.
- When the debt is paid off, or when the card expires, the credit card will be closed.
If you don’t opt-out by the specified deadline, your rate will go up and you won’t be able to do anything about it after the fact. So if you’re carrying a balance and your credit card company notifies you of an extreme rate increase, you should probably opt-out (unless you can pay off the balance in-full immediately). This is the time to forget about whatever effect closing your credit card has on your credit and just get far, far away from this nasty interest rate.
What to Do Next
If you’re not carrying a balance on the card that raised your interest rate, there’s little point to opting-out. As long as you don’t take on debt on that card, who cares about the APR? You might, however, be so outraged with the card company that you want to stop doing business with them. Or, you might want to preserve a lower APR “just in case” you need to revolve a balance on the card in the future.
Try negotiating.
In the past, customers with excellent payment histories could often be successful just calling up their credit card company and saying “Hey, I can get a 13 percent APR with Card ABC or Card XYZ, why should I stay with your card at 20 percent? What can you do for me?”
This strategy is certainly still worth a shot, although you can expect to have a harder time getting concessions from card companies. For one, they know that it’s harder for customers to switch to a new card (due to tightened credit requirements). Second, the card companies need the money. (Not that I expect you to have a lot of sympathy). But with sky-high default rates and the new laws limiting sneaky fees and interest rates that used to make credit card companies lots of cash, they’re trying to figure out how to make money on a totally new playing field. For now, that means charging even their best customers ridiculous interest rates.
Or, get a new card.
If you have really good credit and little or no credit card debt, you’re in luck, because you can probably apply and get approved for a new credit card at a much lower APR than on existing cards you have. (Most cards are offering new customers APRs ranging from 12 to 18 percent; not great, but better than 24 or 29 percent). Your best bet is to apply with companies that are actively seeking new creditworthy applicants, like Chase and Discover. Chase’s Freedom card has been a perennial favorite of card-critics for its simple rewards program, and the new Chase Slate card provides a lower rate, albeit no rewards, for customers who want the flexibility of paying some purchases over time.
- Compare and apply: See my list of recommended credit cards.
What about you? Have your credit card interest rates gone up? How high? What have you done about it? Please share your story in a comment.
Related Posts
- Beware Credit Card Rate Jackings (Increases)
- Summary of the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009
- For the Lowest Credit Card Interest Rates, Look to Small Banks
- Credit Card Changes: Five Ways to Protect Yourself
- Q&A: What kind of credit score do I need to get approved for a balance transfer credit card?
What's Next?
Reading this site, you're already ahead of most people when it comes to your finances. Why not keep going? Help secure your financial future. Take action today:
- It's Tax Time! Start Your Tax Return FREE with TurboTax →
One of my credit cards went from a fixed rate (6.9%) to a variable rate on purchases – but I don’t use that card, so it doesn’t really matter to me. I have a second card at 8.9% that I use for everyday purchases and pay off every month (so again, the interest rate doesn’t matter). My third card has the remaining balance, but that one’s at 7.9% except for about $1100 at the bottom which is a cash advance at ~20%. But I have less than $4K left to pay off and soon the bottom balance will get paid off first, which will be wonderful! And I have enough in savings to pay that one off in full at any time if they raise the rate on me.
I recently had my Chase credit card credit limit lowered from $10k all the way down to $1k even though I have perfect credit and have never had a late payment so I recently applied for and was approved for the American Express TrueEarnings Costco Card.
I negotiated a 8.9% interest rate last month with Citibank. Today I came home to a letter stating that they were going to raise that rate to 29.9%. When I inquired why I was told that Citibank was doing raising everyone’s rate regardless if I was told last month that my new rate was 8.9%. I immediately opted out but the women told me my new rate is now 11.9%. What happened to the 8.9% I asked. She said I couldn’t have it. Sounds very predatory to me.
I have been a customer of Citibank for 15 years.I have excellent credit ratings. I just got a notice that my interest rates are going up to 20%!!!! I called customer service to see if they could lower it back to my lower old rate. They basically said “no”. So, I will opt out and then pay off my card and NEVER do business again with citibank. I feel it is criminal for them to have taken my tax payer $$ to bail them out, and now they are slamming their best customers…Where is the logic in that? I know of a relative with the same card and they got a 30% rate notice. I can assure you that once I pay off my balance i will NEVER do buiness with a regular bank again. I am joining a FDIC insured credit union. To hell with the banks. Nice way to treat loyal and honest customers with excellent credit.
i have been a customer of chase for moore than 10 years.my business credit card with chase was 8.99% in less than 6 month my rate when up to 23.99%. i called chase to lower rate
they told me no. what they offered me was to close the credit card and they wiil give a lower rate.
if i close my credit card will that afect my credit?
my credit is excellent(813), never late in none of my credit card.
i dont want my credit mess up .
what can i do
thanks
I had a Citibank diamond card with a $40,000 limit. Never missed payment. Never late. I float around $5k-$7k on it. It’s for business and I don’t mind since the interest is tax deductible. Got a letter last month that my credit line was reduced to $5k. Today got a letter that my APR went from 10% to 29.99% starging Jan 1 ‘10. No help on the phone.
Mine just went up to 29.9% as well. I lost my job in August and I can’t afford it. I agree for what one person said about the credit card companies getting our tax payer bail out money and then sock it to us. Unfortunately I am left with no choice but to file bankruptcy.
Be careful about paying on the due date if you live on the west coast. I paid after 1pm via the internet using a debit card. I was notified that the bank (CHASE) has a disclaimer that they conduct business on EST!!! They are raising my rate and I am a good costumer. I even called them and they would give grace. I am currently talking to my local Chase banker to help me out. This money was a balance transfer offer, which means I paid a fee for it for a certain time. We never carry much but this was to pay an emergy medical bill. Chase has not been a very agreeable credit company to deal with all along. This is the topper. goodbye Chase.
Chase just raised my card to 14%. Told me they sent a letter during the summer. They probably did but why didn’t they just put it in with the statement and not disguise it as junk mail. I owe a lot on this card. Can’t pay it off. I’ll have to give what I can. This is ridiculous.
US BANK and FIFTH THIRD BANK all raised my rates with Perfect Credit, they ignored what I signed for a fixed rate. They REFUSE to do anything about it, I was greeted with RUDE people and ones that has not one ounce of decency. So my next step will be bankruptcy, I gave up trying to negotiate, trying to get them to drop the rate. They could care less.
CitiBank offered us a very 0% balance transfer option for 6 months. Then it moved to 14.9% which was still doable. Then last November, for absolutely no reason they increased our APR to 31%. We have flawless credit and a balance of 22K on this card. Now the interest is killing us. So, I contacted my companies credit union to roll that balance into a personal loan at 10% over 7 years (it will be paid of in one) and Citibank can be sure that they will never see another dime of my money so long as I am alive.
Fifth Third raised our rate from 3.99% to 24%. We chose to stop paying. I mean, we were the perfect customer. Low balance, didn’t even use the card for the last year, always paid on time and paid more that the minimum. Then we get this Bullshit letter telling us that we had 2 choices. A) Close our account (which screws your credit rating) or B) except a 21% hike. So I chose (C). They will not get one more dime from me.
We all know what is going on here. They are trying to recover their losses on the backs of those of us who are still above the water line. Well…SCREW them. Now they get nothing!!
All of you are socialists at heart. Sure, you whine and complain, but all communist whine. The fact that you people still deposit your checks into a Chase, Fifth Third, Citi, etc is not only an endorsement and socialist vote, you donate hard cash to their cause. They loan 8 to 1 on near zero govt money available to them. Stop complaining, the banks know your true hearts. They are fully aware you will blow hot air and feed them money week after week after week. 8000 other bank brands and credit unions that arent too big to fail, and you people do business with the very institutions that abused the citizens. You people are really the bottom of the bottom. I hope these communist banks pass a law sticking everyone like you people with a 50% APR. You all deserve it. What, are you too lazy to move your deposits to a credit union or community bank?
Jamie Dimon of Chase and Vikram Pandit of Citi, Steven Kabatt of Fifth THird thinks so. BTW, they’re right, you people are absolutely pathetic . I hope your kids arent as lazy and dependent on big banks.
Dearest Gerald,
To assume that I am a socialist is nothing short of ignorant. I am going to extend to you a more pleasant tone than you did to all of us so called ” whiners”.
I HAVE moved all of my balances, which most of is already paid off, and have opened an account at a local credit union. Why don’t you offer people advice and not NEGATIVITY. Nothing good comes from verbally berating people; whom are justly and validly upset that the banks are trying to screw us once again. Nothing good ever comes unless people band together and look for the positive and ensure that legislation is passed “by the people and for the people” to protect us from this predatory practice of jacking up our interest rates.
I do agree that, “voting with your feet” or in this case “voting with your money” and taking our funds to another lending institution, is a good point for those whom have not figured that option out already. If you took the time to read most of the posts you would see that we are fed up with these arrogant banks and are never doing business with them again. We just have to be careful and not close our accts or we will suffer a blow to our credit ratings. So, we are being smart, moving our balances elsewhere and or paying them off in full.
So grow up, and extend people the benefit of the doubt. No one wants to hear NEGATIVITY coming from a pontificating narcisscist!
Just though I would share a quick bit of my story (albeit, it’s been stated 1,000 times all over the internet). This is how it goes…
24, married 1 year, been with my now wife for almost 10. Went to college, got a degree, started working for corporate america, bought a house, the whole nine yards. the makings of “The American Dream” are underway. Credit score nearing 800. Assumed some debt, almost 10k, accepted it for what it was and budgeted to have it paid off in about 6-7 months. Though all was peachy. Well then I got that bastard mailer. The ugly little peiece of paper that I had to readt, literally, a dozen times before I thought to myself, “This is legit. they are really doing this to me.” Not only did we bail out the banks, credit card companies, etc. once before. we are basically doing it again. I went from a 9.24% interested rate on my Citi Platinum Select,which migh I add, previously has always been paid up on and kept current, to 29.99%. My payments more than tripled in a month. This whole situation just seems to have been the straw that broke the camels back so to speak, because shortly after that, my wife has been laid off, and now my job is being threatened as well. Good bye blue house, white picket fence, and my 2 1/2 kids. Fun while it lasted…