Credit Card Quick

A Race to the Finish: Interest Rates Soar as new Credit Card Laws Loom

Credit Card Debt

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.

Tips for Finding the Right Credit Card

Choosing Credit Card

If you have managed to keep a sparkling clean credit history and have earned the bragging rights of a great credit score then you are one of the lucky few to have your choice of credit cards. Individuals with great credit can expect a barrage of credit card offers, mainly through direct mailings.

So, how do you find the credit card that is best for you?

1. Decide what you need – Do you need a credit card for personal use, or will you be using it for business, as well? Do you need a high credit limit, or is flexibility and a low interest rate more important to you? It may be a smart idea to make your list of credit card must-haves before you begin your credit card search.
2. Compare current interest rates, fees, terms and rewards online – A quick search of the Internet will yield many websites offering current information regarding credit cards. You may want to begin your search for current interest rates on some of the most popular credit cards, and determine which companies are offering the best deals. You may also want to check current special offers, such as 0% balance transfers or promotional interest rates to see which ones work best for your situation.

You will also want to check some of the most popular rewards programs, as well, as you may find a rewards-type credit card that best fits your needs and wants. For example, if you are a frequent traveler, then you may want to check credit cards that feature airline reward points.

1. Sort through credit card offers – After you have done your research and compiled your list of must-haves, you can begin sorting through the credit card offers you have received in the mail. Shred all offers that you don’t accept, and make a pile of credit card offers that you want to research further. You may also want to check online offers for credit cards, as well.

Once you have narrowed your choice down to one or two credit cards, carefully read the terms and conditions of the credit card and, most importantly, make sure that you understand all of the card’s small print before entering into a contract with the company.