Credit Card Interest Rate Hikes and Opting Out
Credit card companies often exercise their right to raise interest rates for any reason at all. Even with an immaculate credit score and history and a long-term account in good standing, you might not always be free from that coming rate hike. Fortunately, all consumers have to be notified of this increase in rates before it goes into effect so they can be prepared. Most, but not all, credit card companies have an opt-out option that allows you to forgo these interest rate increases, but what doe it mean and what should you watch out for?
Opting-Out
In a nutshell, opting-out means you will send the credit card company written communication telling them your wishes to opt-out of the coming rate hikes. Be sure to check your terms and conditions closely to ensure that your company does, in fact, offer this option. Typically, you will be allowed to continue paying within the current terms and conditions until your balance is zero. However, many companies will most likely want you to pay off your balance in full or as quickly as possible and your card might be canceled, since you have declined the change. This gives you the opportunity to find a card more fitting to your wants and needs. However, you want to be careful and watch your step. There are some mistakes you just don’t want to make when opting-out of a credit card interest hike.
Don’t Continue to Use the Credit Card
If you inform the credit card company of your intention to opt-out and then continue to use the credit card in question, your use will nullify your wish to opt-out and your account will remain open. You will now be subject to the new interest rate. When your write that letter stating your intention to opt-out, set that credit card aside or get rid of it. Do not use it again.
Paying Bills
If you have some or all of your bills set up to be paid automatically using the credit card you are opting out of, be sure to change this information immediately and set up other arrangements. You do not want your bills to be late or not paid, and if your card were to be used, the nullification of the opt-out applies and you will be subject to those higher interest rates you wanted no part of in the first place.
Also, be sure that any company or retailer that you shop with online has all of your billing information updated. If the card you opted out of is stored in their system and accidentally used, it could mean voiding your opt-out and incurring higher rates. Make sure everything is up to date and all should go smoothly.
The Card
Protect yourself from fraud and identity theft by shredding or cutting up the card you are opting-out of, as opposed to just tossing it into the trash. You can also recycle your card using nifty craft ideas. Read up to protect your personal information and identity and take every precaution. Should this happen, and you are able to provide proof, the credit card company is not likely to hold you liable. However, you want to focus on prevention rather than solutions to the problem, if you can. It will save you a lot of time, effort and hassle.
Remember, you don’t have to sit back and accept the new rate increases from your credit card company. You can opt-out. Just be sure to follow the protocol to protect yourself, your finances and your credit score in the process.
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