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Why Credit Card Rates are Rising |
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by: Debbie Dragon
Consumers have been seething over the latest rate and fee increases by credit card companies. And it appears that it is not so much over the fact that there are increases, but the fact that communication about these changes has been slow in coming which has left card holders in the dark. There are stories out there that prove this phenomenon.
A couple attempts to purchase new tires for their vehicle only to find out that their card is declined. After they arrive back home, they log onto their account and find their balance at the amount they thought, but that the credit limit hand be cut almost by 50%, which cause the over-limit rejection. Furthermore, they received no communication about this decrease until two weeks later. That left their account subject to overage fees, etc.
Another man finds out that his interest rate almost doubles even though he has excellent credit. Yet, when he attempts to close the account, his credit is negatively affected.
What gives? Why are changes being made to credit card accounts seemingly at random?
Experts in the financial field tell us that these rate and fee changes are due to economic conditions and that the credit card companies are attempting to shore up their financial situation in the face of difficult times. In addition to this, credit card borrowers are having a difficult time keeping up with their payments and that is causing adjustments in fees and charges as well.
What Can You Do? You have very few options in handling these changes, because increases and changes can be made at the card company’s discretion. And, they are only legally bound to notify you in the event of a fee change, not interest changes.
You have tread very carefully at this point. If you have the money to pay off your cards, it would be wise to do that and then close them down. Even if this means that your credit score goes down a bit. At least you can be done with that company.
If you do not want to close the account, you can call the company and plead with them to allow your rate increase to not increase as high as was enacted. They do have some leeway, so you might be successful in this manner. Especially if you have excellent credit and your payment history is flawless.
Tell the credit card company that you want to opt-out of the interest rate change which will freeze your card, account and interest rate. Then you will have to close the account.
Transfer your balances to another card. This can be done, but you will find that there are not as many attractive offers out there right now because all of the card companies are going through the same thing. Also, you probably will have to pay a balance transfer fee so the advantage to doing this is not very great.
Do nothing for now. If you are in the market to purchase a house and are applying for a mortgage, you do not want to do anything that would negatively impact your credit score or leave a suspicious mark on your credit history. So it would be wise to wait until that transaction is consummated.
With the financial conditions that exist, you are basically caught between a rock and a hard place. Your overall approach should be to keep your credit for being negatively affected as much as possible, while attempting to keep your fees and interest rate charges as low as possible. Move carefully and make good choices.
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Credit Card Articles > Credit Card Education > Why Credit Card Rates are Rising
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