We all know that if you opt-out of a credit card rate increase, that’s the end of using that card. They’ll close your account – or at least close the part that allows you to use it again.
The account will remain open for receiving payments, and it will remain on your credit report – showing both the credit line and the balance owed at the time of each month’s statement.
But what then?
If you’re at a rate of say, 8.9% and they notify you of an increase to 16.9%, you can opt-out and keep paying 8.9% until your balance is paid in full.
Or can you?
As it turns out, the answer is no. You mustn’t assume that your rate will remain at 8.9% just because you took this action.
Your credit card issuer can come back in a few months and raise the rate again. They need only give you 15 day’s written notice of the change before it goes into effect. Considering possible delays in mail time, consumers taking vacations or working away from home, and a variety of other factors, you might not even know about the latest change until it’s too late to prevent it.
That is, if you read the mail at all. Since most people assume that they’ve done what they needed to do and their rate is set until the balance is paid, they don’t read that notice and thus don’t even know that they need to action in time to avoid a rate increase.
Under the new Credit Card Accountability, Responsibility and Disclosure Act that will go into effect in February 2010, the card issuers won’t be allowed to apply a rate increase
for “any reason or no reason” as they can now.
The only time they’ll be able to raise rates is
1. If your account is 60 days past due
2. If you’ve signed up for a variable rate tied to an index and the index changes
3. When a promotional period expires
When it comes to dealing with credit cards, February 2010 can’t come too soon for most of us. In the meantime, do read every piece of mail you receive from your credit card issuer.
Not only could it tell of a rate increase, it could give notice of a drop in your credit line that could cause you trouble. Should you inadvertently use a card whose line has been lowered you could find yourself looking at over-limit fees or an embarrassing denial of credit at a retailer’s.
Author:Marte Cliff
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