Avoiding Credit Card Interest Rate Hikes

You may have noticed that the interest rates on your credit cards have been creeping up. Major credit card companies are scrambling to offset losses from cardholders that have allowed their accounts to go into default.

In addition, card issuers know that interest rate increases “at any time for any reason” are not allowed after February, 2010. These increases were banned by the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009.

If a card issuer fails to increase a rate on an account holder prior to the implementation date of the Act, then they are severely limited in their attempts to raise the interest rates later on. This is a way to “grandfather” an account into one paying higher interest.

Specifically, the Act prohibits the charging of higher interest rates on an account as a penalty unless the customer falls at least 60 days past due. This protects a customer that forgot to make a payment or lost a statement in the mail.

Additionally, universal default is also outlawed. One creditor cannot hike your rates based on how you handle a different account with another creditor.

There are a lot of new protections put in place by the Act, but it did nothing to protect cardholders in the period prior to implementation. There was essentially a race by card issuers to boost the profitability of each account and reserve this right to profit. They can always lower an interest rate, but they will be limited in how they can increase the rate.

How to Protect Yourself from Interest Rate Hikes

Your financial strength, credit scores and cash reserves are going to dictate how well you can avoid these interest rate increases. The better each of these is, the more likely you can resist changes to your account terms by negotiating better terms or moving debt to other creditors.

When you have great credit and extra cash to throw at your creditors, you may negotiate better terms directly with your creditors. Any creditor that fails to provide you with the rates you deserve can be replaced by another company that wants your business.

If you have faced financial difficulties and credit challenges, then you may need help in dealing with your creditors. While debt settlement companies fail miserably to help improve your situation, nonprofit credit counseling organizations are highly effective at helping you gain benefits with your creditors that you often cannot receive on your own. For more information, consult your Better Business Bureau to find a nonprofit agency that is in good standing.

You may find more information on reduced interest rates on credit cards.

Kenneth Long began his public service with nonprofit organizations in 2001. He has since conducted workshops teaching other nonprofit executives how to integrate credit counseling with volunteer tax preparation programs. Long is a graduate of the University of North Carolina at Chapel Hill and received his Certificate in Nonprofit Management from Duke University.

Article Source: http://EzineArticles.com/?expert=Kenneth_Long
http://EzineArticles.com/?Avoiding-Credit-Card-Interest-Rate-Hikes&id=2657344