3 Steps to Thwart a Credit Card Rate Hike

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With Congress mulling how to cap credit card rates, card companies aren’t waiting to see what happens – they’re raising rates now. But with one-third of U.S. cardholders paying interest rates above 20% (according to statistics from the U.S. Senate Banking Committee), you can take these key steps to make sure if your card company comes looking to raise rates on you.

First, you don’t have to accept higher credit card rates lying down. Help is coming from legislation that would curb arbitrary and sudden interest rate hikes, hefty late fees, and the industry trend of applying payments to lower-rate balances before higher-rate balances.

But why wait? Credit card holders can also take action against higher rates by:

Sending your card issuer a message – If you get word of a rate hike from your credit card company, tell them you’ll respond by leaving. Before you raise that prospect, be prepared. Find another card with zero-percent balance transfers and no annual fee. And what’s also important is to find out what your interest rate will be with the new card company. Make sure you get the rate that will apply after any introductory deals. Then, armed with your new, presumably lower rate number, contact your current card company and tell them you’re leaving unless they match or even go under the new card company’s interest rate. You’ll probably find yourself in negotiating mode with a credit card agent whose job it is to make sure you remain a customer, so you have leverage … probably more leverage than you think. But, note that canceling a credit card may impact your credit score. So aim for getting a lower rate from your current card company. But if they say “no” then take the better card offer and fire your credit card company in the process.

Check your monthly statements
– Yes, it seems mundane, but reviewing your card statements might be the best way to thwart rate hikes. Credit card companies, by law, have to record written notification of pending rate hikes. Most people tend to gloss over the rate information in both their monthly statements and from any notifications from the card company informing customers of the rate change. It’s much easier to block a rate hike before it happens than after it happens. So if you see news of a rate hike, get on the phone with your card issuer right away.

Take the “temporary closure” route
– As stated above, closing your credit card account may hurt your credit score. But one option card-holders have when faced with a higher rate is to ask their card company to “suspend” your account at your current rate – meaning you can’t use the card, but the account is still technically open and safe from any credit score damage. Then, after a few months, when the economic cloud lifts, reactivate the card with the lower rate in place. Card companies are surprisingly open to this option, but you usually have to ask for it.

Don’t let your card company push you around. Use the above tips to keep your card rate low and your card company on a firm leash.

To find out the best credit card rates out there in the marketplace, visit BankingMyWay’s credit card rate tracker.

—For more ways to save, spend, invest and borrow, visit MainStreet.com.

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