While unfair credit card rate increases can be very hard to take, there is little you can do about them. Even if you have a fixed rate credit card, changes to the rate can be made by the issuer by simply advising the consumer of the change and when it will take effect. As a consumer, you can contact the issuer and protest such changes, especially in the case of penalty rate increases.
Alternatively, you can stop using credit cards that make unfair rate increases and look for a new credit card from issuers who have a good track record of treating customers fairly.
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Credit card companies often entice new customers with amazing introductory offers of low to no APR for a period. However, as a consumer it is important to look beyond the introductory rates and examine the standard APR a credit card charges its customers after that period. This is the realistic rate and the one to be compared when choosing a new card.
You Can Predict Some Credit Card Rate Increases
If you have problems following some of the rules set forth by the credit card issuer, you will face credit card rate increases. Two of the penalty rates most commonly faced by credit cardholders are the over the limit penalty rate and the late payment penalty rate. Essentially what happens is that when the cardholder exceeds his spending limit or misses the payment due date, a new higher penalty rate is triggered.
While penalty credit card rates are sometimes temporary, often they are permanent. It is important to know what the policy of your credit card issuer is when it comes to penalty rates. Don’t assume that it is temporary, only to learn later that it is indeed your new permanent rate.
If you have been charged penalty rate increases, you can call the lender and ask for leniency, explaining any extenuating circumstances. This is the type of credit card rate increase where you can have the most success getting it overturned, especially if you have a good credit score and a solid payment history. A penalty rate triggered by a one-time slip-up can often be forgiven if you take the time to contact the lender. However, essentially the decision and the power over the rate is in the hands of the lender.
Your Power in Regards to Unfair Credit Card Rate Increases
As a consumer, it is indeed your right and within your ultimate power, to decide whether to do business with a particular credit card issuer. Even if they have issued your oldest credit card and you want to keep it open to safeguard your credit score, you can pay off the card and get a new one with much more reasonable rates. If you are not using the credit card with the unfair rates, the company cannot make any money from you.
Consumer choices speak powerfully to businesses and credit card issuers are businesses. If more consumers take charge of their credit use and avoid issuers who treat them unfairly and favor ones that do, issuers will ultimately have no choice but to change their ways.
Avoid Unfair Credit Card Rate Increases
You can indeed avoid unfair credit card rate increases in many situations. Essentially, you need to know exactly what your credit card’s terms and conditions say. If you understand this fine print, you will know exactly what will cause penalty rates to kick in. Penalty rates are often perceived as the unfair rate increases, when in reality, it is clearly spelled out for you, so you can avoid such rates.
Primarily, as long as you keep good credit card management skills, you should be able to avoid such increases. You can find such information on how to do so quickly and easily through online resources such as MyMoney.gov. This means always making timely payments, never going over your limit and monitoring your credit score.
Your credit score is affected by a variety of factors. These include how much available credit you have, your debt to income ratio, your payment history and more.
Find out about your credit score by getting a free yearly report from one of the major credit reporting bureaus: Experian, TransUnion, or Equifax.
If you cannot avoid unfair credit card rates, the obvious solution is to find a better credit card to suit you, your spending habits, and your credit rating.
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