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How to Deal with Sudden Credit Card Interest Rate Increases

If you are one of the millions of Americans who have recently seen your credit card interest rates increase sharply then you can at least take comfort in the fact that you are not alone. Not much solace I know, but that’s all I have to go with right now. The major credit card issuers including American Express, Bank of America, Citibank and Capital One have all cited economic conditions as the reason for them raising interest rates on their cardholders.

The people that have seen these interest rate increases, or the ones that will see them, have credit card interest rates that are now below 10%. If you’ve not yet seen an increase yet and you fit into this category then you can expect your interest rates to go into the double digits. The Wall Street Journal states that this could affect upwards of 4 million credit card account holders.

The credit card companies are facing record defaults in charge-offs and because of this their profits have been trimmed dramatically. In order to make up for the shortfalls they are now tapping into any stream of income they can get their hands on including the very customers that have been loyal to them and have never missed a payment. It hardly seems fair but who ever accused the credit card companies of being fair to begin with.

This is obviously the worst possible time for cardholders to have their interest rates raised, but nevertheless that’s exactly what’s happening. There are some steps you can take to mitigate the effect of rising interest rates. These are no miracle cures by any stretch of imagination and they do not apply to everyone, but they are solid tips that can benefit you financially.

Contact Your Credit Card Issuer – It never hurts to contact your credit card issuer directly and attempt to negotiate a lower interest rate. It may not always work but you would be surprised at how many times it actually does work. Be courteous and respectful when stating your case and explain to them why it would be beneficial for both the credit card company and you to have a lower interest rate. It most certainly doesn’t hurt to try.

Pay off Your Credit Cards – If you are in the position that you can afford to pay off your credit cards and you find that your interest rates have been raised then by all means take advantage of your sound financial situation to pay down those credit card balances. Credit card companies cannot charge you interest if you do not carry a balance with them. If you cannot afford to pay off your balance in full then pay down as much as you can as quickly as you can.

Compare Credit Card Offers – There are many reputable credit card comparison websites that allow you to compare credit card offers from the leading issuers. We suggest you take a look at the credit card deals featured on www.creditcardcandor.com to see if you can get more favorable terms and lower interest rates. Shopping around is a powerful way to uncover the best deals so take advantage of that.

We hope you find these tips to be helpful. They are simply practical ways in which you can effectively manage your credit card balances and defend yourself against credit card issuers that arbitrarily raise your interest rates. The Credit Card Reform Act offers protection against credit card companies jacking up interest rates whenever they feel like it, but unfortunately those protections won’t take effect until next year.

Related Information:

  1. Credit Card Interest Rate Increases to Be Looked at by Regulators The feds are now taking a look at how credit card issuers are aggressively raising interest rates on existing balances….
  2. Credit Card Companies Could Be Hurting Themselves with Interest Rate Increases This certainly is an ironic twist but I can’t help but wondering if credit card companies are raising the interest rates on cardholders are actually hurting themselves in the process….
  3. Federal Reserve Asked to Look into Credit Card Interest Rate Increases Reuters ran a story last week that reported that Senate Banking Committee chairman Senator Chris Dodd (D-Connecticut) drafted a letter to Federal Reserve Chairman Ben Bernanke and other regulators requesting…
  4. Credit Card Interest Rate Secrets Exposed We expose several credit card interest rate secrets that the issuers simply do not want you to know….