Friday, November 06, 2009

Credit Card Rates: How High the Moon?

Are your Credit Card Rates Rocketing?
I got one of those letters you tend to ignore the other day...a boring all legalese style thing from my credit card company. Two of them in fact. I was busy so it wound up in the inbox among the bills. A little voice told me that might be important so I finally opened one in a dull moment and read these words: "Thank you for your business"....with some more stuff about informing you of your consumer rights and protecting your credit.... and hidden halfway down in small type this letter informed me of my new interest rate just jumped over 10% higher. What gives?

Congress recently passed a bill to curb consumer debt. That bill required Banks and Credit Card Companies to give 30 days notice in writing before they could raise our interest rates and they must have a 'reason'. The Credit Card companies told their friends in the House Financial Services Committee they could not possibly effect such a huge change and inform all their customers in so short a time. So Congress gave creditors until February 2010  to 'inform consumers' that they are raising your interest rates. Don't be surprised to see a dramatic rise before the new bill takes effect.

Who is being served? Essentially, consumers are being encouraged to become more conservative in their use of credit and banks are being more risk averse. The ideal is to see more consumers paying down their debt and keep it down.

What's a wise consumer to do? When you get the letter, call your card company and tell discuss the possiblity of  'opting out' of the increase. This may mean your card will be frozen. You will have the option to pay it off and keep it open with a zero balance (for the foreseeable future) or transfer to another lower balance card.
Your best bet may be to pay your cards down to zero balance and use them more conservatively in the future and lower your interest payments over time. Everybody wins.

Generally it is also a good idea to Opt Out of new credit offers:
Opt out of prescreened Credit Offers here:

The Federal Trade Commission offers advice on opting out of call, mails and email:

Happy Opting Out! 

© 2009 susan templeton