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Why Credit Card Interest Rates Increase and How to Avoid Rate Hikes
Not only does a higher credit card interest rate cost you more money on charges that are carried forward (unpaid in full each month), but having your rate increased may be because of bad credit activity which may raise the interest rates of your other lines of credit.
Although there are credit card reform proposals, existing law requires your creditor to notify you only 15 days before your rate increases.
Here are some reasons why your credit card company might raise your interest rate:
making a late payment on the card, or on another credit card even if it isn't from the issuer who raised your rate
going over; or nearly over, your credit limit, whether on the affected card or another card
suffering a lower credit score, whether due to action related or not to the credit card
having too many credit cards
having too much debt
bouncing a check
filing bankruptcy
filing deceptive information with the issuer
breaking the credit card terms
using the credit card illegally
having a variable rate card which the base rate had increased
changing market conditions
your credit card issuer simply chose to raise rates
If your credit card company raised your rate, you have the option of closing the account and paying off the balance at the old interest rate.
If you don't understand why your credit card company raised your interest rate, call the customer service number on your credit card statement. And it certainly won't hurt to ask to have your rate lowered.
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Credit Advice: Keep in mind that; due to government regulations, there are fewer credit card offers, particularly for bad credit people. If you have credit problems and already have a credit card, you may want to hang-on to it even if the issuer raises rates or lowers limits.
