Chicago, IL-June 26, 2009 – Many people have recently seen the interest rates on their credit cards more than double. Citing economic conditions, American Express, Bank of America, Citibank, Capital One, and HSBC are raising rates on potentially millions of credit card holders. Fortunately though, there are a few steps that credit card holders can take to try and keep their old rate.
“For many people, this is the worst possible time to see interest rates rise on their credit cards,” said Steve J. Bernas, president & CEO of the Better Business Bureau serving Chicago and Northern Illinois. “The best defense against rate hikes is to manage credit responsibly and maintain a good track record for paying bills on time, for those who don’t have a stellar record; there are still a few things to do to keep from paying even more every month.”
The Better Business Bureau offers the following advice for fighting back against skyrocketing interest rates.
Contact your credit card company.
While most interest rate hikes affect only customers who carry a balance, some customers in good standing have seen their rates increase as well. Anyone who believes their rate was increased by mistake should contact their credit card company. There is evidence that credit card companies might be willing to negotiate rates in order to keep cardholders as customers, so it doesn’t hurt to contact the company and discuss options.
Pay off the account.
If the cardholder doesn’t want to accept the new rate, they can choose to keep their current rate and pay off their outstanding balance, as long as they don’t make any new purchases. If any new purchases are made, the higher rate will be enforced.
Find a better deal elsewhere.
Other credit card companies might be offering better deals, such as low introductory rates that will give the holder a less expensive way to pay down debt. Shopping around may provide you a better deal.
Manage credit responsibly.
According to banks, most rate hikes affect people who maintain balances on their card or have rates that are too low for the market. Therefore, one of the best ways to avoid a sudden interest rate hike is to use credit cards responsibly which includes paying bills on time and not carrying a balance.
Keep an eye on new regulation.
The Federal Reserve has passed regulation, effective July 2010, which will limit a bank’s ability to raise interest rates on cards. In the meantime, some members of Congress and the Obama administration are encouraging reform of the credit industry and increased oversight to restrict practices such as arbitrary interest rate hikes and exorbitant rates.
For more advice you can trust from your BBB on managing credit responsibly, go to www.bbb.org.