How to stop the bank from raising your credit card rates

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How to stop the bank from raising your credit card rates
2 years ago
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Despite the recession, you've managed to keep your head above water. Barely. You've cut back on unnecessary purchases, you shop around for the best deals on the things you need and you are bringing extra money with a part time job. It's not a perfect life but you're doing okay. But then, out of the blue, you get a letter from the bank telling you they're raising the interest rate on your credit card.

Thousands of consumers are finding themselves in similar situations with their credit card companies. Suffering from record losses due to the subprime mortgage situation, many banks are increasing credit card interest rates as a way to generate revenue before the laws regulating rate hikes go into effect.

These new laws are aimed at putting a stop to tactics banks use to squeeze as much money from their customers as they can. Tactics, such as raising interest rates after a late payment and using your payment history with other creditors as an excuse to raise rates, which serve to keep consumers in debt.

But the laws won't go into full effect until July of 2010 which has caused some banks to try to pad their profit margins by jacking up the interest rates of both current and new card holders. If your bank is bumping up the interest rate on your credit card, here are a few things you can do to stop them.

Opt Out
As of August 2009, banks are required to notify consumers 45 days before they change the interest rate. They must also allow you to Opt-Out of the rate hike. So when you receive your notice, you can call your credit card company and tell them you reject higher interest rate.

Be aware, though, that while the bank has to honor your request, you will not be able to make any new purchases on your credit card. To do so would constitute agreement to the new interest rate and you'll be stuck with it for as long as you have the card. Luckily, the new credit card laws require that banks give you five years to pay off your current balance at the old rate.

If opting out of the rate change is out of the question for you, then try negotiating with your bank to keep your current interest rate. Whether or not your credit card company will negotiate with you depends on many factors including your current credit score, your debt to income ratio and your payment history with them. However, if you've been a long time customer who has a good track record with them, it can't hurt to try.

Before calling, shop around to see what other banks are offering. It costs a lot of money to secure new customers and you can use this to your advantage. If your bank sees that you are ready to switch, they may make a deal just to keep you. If they agree to leave your rate the same, make sure you get that in writing.

Switch Banks
If your bank won't negotiate with you then switch to a different credit card. With so many on the market, it shouldn't be difficult to find one that fits your needs. Shop around for the best deal. Don't just look at national banks such as Citi or Wells Fargo. You'll often find that credit unions have some of the lowest rates around.

You can do something about your credit card interest rates. Be assertive and take control of your financial future by making sure your credit card company doesn't take advantage of you.
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