Keep an Eye Out for 'Junk Mail' Rate Hikes

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Few would accuse the credit card industry of not exhausting every means possible to hike rates, and then hiding that fact from consumers. The latest trend is sending rate hike info in the form of "junk mail."

How does it all go down? Here’s a potential scenario: you’ve been a cardholder with one of the major banks for years. But one day you find out that your interest rate doubled to 30%. It turns out the credit card ran your rate up because you were a day late on a payment, maybe even because your monthly payment due date was changed by the card issuer.

But you never saw the change in your payment policy. Why? Because the card company “hid” the change in a letter that looked like a piece of junk mail. Being human, you noticed the piece of junk mail, sometimes with no return address, having seen dozens in your mailbox before, and tossed the envelope — unopened — in the trash.

The fact is, credit card companies are banking on the fact that you’ll throw the letter away. After all, they designed it that way.

As part of the Credit Card Reform Act, which takes effect in February, 2010, credit card companies must inform you in writing before any changes to your card deal can take place. And even then, you still have the right to “opt out” of any changes you don’t like.

To increase the chances that you’ll “miss” the change in your card credit policy, card issuers are beginning to bury the changes in fine print, which in turn is hidden in the form of a letter that looks a lot like credit card junk mail.

It’s perfectly legal — all the law states is that card issuers let you know about any changes to your credit card policy. There’s no law that says card issuers have to send you a Federal Express (Stock Quote: FDX) package carrying the news of an interest rate hike.

How to fight back? It’s not rocket science. Above all else, make sure you open every piece of mail from your credit card carrier, no matter how benign the envelope looks.

In addition, while it’s a chore, take a magnifying glass to the fine print in any piece of correspondence from your card carrier. That’s the likely landing spot for any language telling you your interest rate is about to change.

To further thwart card companies, make sure you always know where your monthly due date falls on the calendar. Once a month, turn your card over and call the 1-800 number on the back. Card companies usually tell you on a recorded message when your monthly bill is due.

It’s all about being proactive, and fighting the card companies the same bare-fisted way that they’re coming at you. The first part of winning that fight is understanding how credit card companies think, and knowing how your card issuer will go to any legal length to keep news of any rate hikes away from you — even if it means “hiding” it in plain sight.

—For the best rates on loans, bank accounts and credit cards, enter your ZIP code at BankingMyWay.com.

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