Did Your Credit Card Rates Increase YESTERDAY?

Since Congress overwhelmingly voted to pass a credit card legislation bill protecting consumers from unfair interest rate hikes and fees, credit card companies have been working to get their rates increases in before the legislation becomes official. In other words, your credit card interest rates were likely to have gone up yesterday as credit card companies raced to raise rates before the closing bell.

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For instance, one of our readers notified us this morning that she received a letter yesterday that Chase  was increasing her credit card interest rate from 9% to over 13%. The verbiage in the letter explained the reason for the rate increase was in order to “maintain the profitability” of the account. The notice gave a couple of weeks time to either a) close the account or b) do nothing and accept the rate increase.

Why did credit card companies rush to increase rates?

Under the new legislation:

1. No more retroactive rate hikes – Credit card companies cannot increase rates on existing balances, but only on new balances.
2. Longer notification periods – Credit card companies must give 45 days notice, rather than just 15

What should you do if your credit card rates have been raised?

1. If you’ve had the card a while and have a history of good payments - You may want to keep it in order to keep the age of your good credit accounts as old as possible. Learn more about maintaining old lines of credit »
2. If you keep low balances – Consider keeping the card. The amount you’re paying in interest is pretty low.
3. If you keep high balances but good payment record – You may want to consider finding a lower credit card rate and transferring your balance.
4. If you keep high balances but have bad credit or payment history – Focus on paying down your account, improving your credit, and then try to get a new card with a balance transfer. Also, it doesn’t help you if they hiked your rate yesterday, but under the new legislation, if your rate is increased and you pay your account on time for 6 months, they have to reduce your rate again to the introductory rate offer.

Have you recently received such a letter or experienced a credit card rate hike? Tell us about it and what you plan to do.