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How to Respond to a Credit Card Rate Increase

Credit card issuers have a reputation for increasing the credit card interest rates at short notice (usually specified in the terms and conditions when you sign up). The credit card rate increase seems unexpected because of the fact that most of the credit card issuers are liable to give a fifteen day prior notice only. Nowadays, banks are increasing credit card rates based on the card holder’s overall debt or credit.

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For example, if the card holder has an unexpected medical bill or takes out a new mortgage, the credit card interest rate may jump. New laws are being considered to restrict the credit card rate increase to facilitate the credit card holders.

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Here are some guidelines that can help a credit card holder in responding to credit card rate increases.

Opt-out period

When the interest rates are increased, the card holders are given an opt-out period that allows them to reject the credit card rate increase. As a result of this the account will be closed and the card holder will continue to pay the balance at the lower interest rates. But once the balance will be repaid, the card will be inaccessible since the account will be closed. Closing the credit card account might not be a feasible option in most of cases so there are other things that might be done.

Negotiate a lower rate

If the card holder has always paid the balance on time and one gaffe has caused this credit card rate increase then the terms are negotiable with the card issuer.

Paying off the balance

The credit card holder should try to pay as much of the balance as possible, before the increased interest rate goes into effect. If the balance is on the lower side then the new increased rate will have a lesser effect.

Transferring to a lower rate card:

Before transferring the balance to a lower interest rate card, the card holder should have enough available credit to handle the new balance.

To accept the changes:

Although it may not seem to be the most desirable option, it may be the only viable one. If no other options seem practical the card holder will have to pay the balance with the new higher rates. Paying the balance quickly can save the card holder from paying the higher finance charges. As long as the payments to all the card holder’s accounts are made on time and stays below his credit limit, the card issuer may eventually decrease the interest rate after six to ten months.


Consumers now complain that no matter if the bills are paid on time, the card issuing companies still increase the credit card rate interest. In the current financial state, credit card companies make decisions to enhance their profitability and these decisions include credit card rate increase, tightening requirements for new lenders and decreasing credit limits. Closing old credit card accounts can have adverse effects on the card holder’s financial health and credit history.

At, you can apply for your credit card online and receive an instant approval, where possible. That’s about as easy as it gets.

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