Credit card companies are raising interest rates because they need to increase revenue for their industry. In the past, credit card companies were able to practice business differently; monetary changes were applied to customers’ accounts without prior notification or plausible explanation. This helped the credit card companies acquire large sums of money.
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The Credit Card Reform Act of 2009 put a halt to many of these tactics, causing the credit card companies to suffer financial loses. While the new credit card rules provide major benefits to the consumer, the credit card companies still need a way to recoup their losses.
As long as they comply with Federal regulations, they will exercise the right to review your account periodically and assess your risk. With this information, they can raise your interest rates; they must however, provide you with 45 days advanced notice.
What happens if I receive notice that my APR is increasing?
If you have always received a fixed credit card APR and receive notice that your rates are increasing, you can take a few steps. One of the more drastic is to cancel your credit card. With the advanced notice, you should have enough time to close your credit card account successfully without being hit with the new APR.
Your credit score can be affected when you close your account so consider this. If you request to cancel your credit card, the issuer can also request higher monthly payments so be very careful and make sure you understand the consequences of your decision.
This may not appeal to most, so another choice is for you to pay your entire balance off before the deadline. The new credit card laws require all billing statements to be written in a way that is clear and precise and it must be delivered within 21 days of the due date. This means you if you can pay down the debt within the 45-day limit, your new bill will reflect a zero balance and the APR will not apply.
Another selection includes how to transfer a credit card balance to a low interest credit card. This can be a new card you apply for or an existing card. Either way, this is a good way to keep your APR under control; you will not have to cancel the credit card and risk affecting your credit score.
How can I be sure my credit card company is not violating any of the new laws?
Since the new credit card laws are geared towards consumer protection, you shouldn’t have a problem monitoring your account. Create an online credit card account so you can have instant access whenever you need it. Even before you receive notices in the mail, there may be updates posted online.
Familiarize yourself with the credit card contract terms and your responsibilities; take special notice of your obligations that can nullify the new reform laws if you fail to meet them. You should know basic things like your billing cycle, how they determine a credit card late fee and any other charges that you may be subjected to. The more you educate yourself, the more knowledge you have. This is your best defense.
Focus your attention on anything that looks irregular on your credit card statement and contact a customer service representative right away. They should already have processes in place to correct the situation. If they fail to provide ample assistance, your next step is to contact the Federal Trade Commission and file a complaint.
You must have all of the necessary data so they can refer you to the correct party; the FTC is not responsible for resolving your issue, but they will register your complaint and retain the data for future use. Overall, they are your best resource and will put you in touch with the necessary party to help solve your problem.
Once your complaint is received, you will be contacted. Based on your documentation, an investigation of the credit card company listed on your complaint will ensue. If they are found guilty of violating the current credit card laws, they will be fined heavily.
Will my interest rates be higher if I am under 21 and apply?
The new credit card laws were created to assist consumers and teach young adults how to manage their finances. Considering this, some changes have occurred for the younger crowd. If you are under 21 and cannot provide specific documentation proving your income is sufficient, your application will be rejected.
You will need to have a co-signer, usually a parent or guardian who meets the correct criteria to take on the financial obligations. Your credit card co-signer must have a full understanding of the responsibilities they have to make the payment if you fail to do so. This means your actions can affect their credit history.
Over the past few years, the credit card companies have been wrapped in controversy. Praised by some and condemned by others. Depending on your financial situation, you may represent one or both sides. No matter what the argument, the fact remains that credit cards can be extremely useful when properly managed. Take time to learn as much as you can and apply them to your lifestyle.
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