A Race to the Finish: Interest Rates Soar as new Credit Card Laws Loom
As the holidays creep closer, we may all be so busy thinking about our holiday shopping that our credit card interest rates may be the last thing on our minds. But not so fast.
Before you spend another dollar on your credit card, you may want to first check to see if it is one of the countless credit cards that will see an interest rate hike before the end of the year. Many creditors, in an attempt to beat the credit card legislation to the punch, have chosen to increase consumers’ credit card interest rates before the law goes into effect in February.
What’s Next?
And what does that mean for consumers like you? You guessed it: a potentially expensive holiday season.
Many industry analysts have seen creditors of late increasing credit card interest rates; some to nearly double their current rates. Many creditors have raised interest rates upwards of 30 percent – or more!
And don’t think that these interest rate hikes are for those credit card consumers with less-than-perfect credit. Many credit card customers who have always played by the rules are even experiencing these credit card interest rate hikes.
A Nine-Month Mistake
Many industry experts knew that this kind of situation would result, as members of Congress gave creditors nearly nine months to consider the implications of this legislation and change up the rules before they take place.
In other words, creditors are getting what they can from their customers while they still can.
Your Rights
It is important to understand, however, that creditors still don’t have cart blanch when it comes to your credit card account. If your creditor raises your card’s interest rate, the new interest rate can only apply to new charges. In other words, if you have a balance of $1,000 with an interest rate of 9.99%, your creditor must allow you to pay off that debt at the current interest rate and not the new, raised interest rate.
There is one catch to this, however; if you fail to make a payment on time or exceed your limit your creditor can then change the terms of your contract, which would likely include an increased interest rate on your existing debt.
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