Credit Card Companies and Raised Interest Rates

A new law has recently been introduced and will be put into effect in February 2010 which will "limit the all bank's abilities to raise rates and fees, and require them to give greater disclosure on the costs of borrowing." (www.channel3000.com/money)

Credit card companies are raising their interest rates for everyone, even their great long standing customers. Because there is no law preventing them for doing this, they can get away with it. If you get hit with interest rate hike, you actually have the option of opting out and letting your credit card company know that you will not be using their card anymore. However, if you use the card you are accepting that this interest raise is ok and you are accepting the hike.

A lot of credit card companies who weren't using annual fees before, are now putting annual fees into place which is causing long time customers to feel a big slap in the face. On top of adding annual fees, credit card companies are also starting to charge up to 5% for a balance transfer of accounts. However, if your fee is higher than it has been, and you feel like you are being ripped off, you have every right to call up the company and discuss with them that you would like to re-lower your fees. If you've been a long time customer, letting them know that you are considering leaving their company might help you in getting those fee's lowered.

Minimum payments are also rising from about 2% to almost 5%. However, this could be in the customers benefit. Paying a 2% minimum could cause a customer to pay 40% more then they owed in the first place. Therefore, paying more each month will help you in the long run. Though, lots of people are struggling with unemployment right now, and a 5% minimum payment might just push you over your monthly budget. You can call the credit card company and most likely talk your way back down to 2%.

One bank who will not be participating in the practices of raising rates is Bank of America, they have pledged to not change anything with their customers between this time and February when the new law will take place. However, banks like Discover and Chase have already changed their customers fixed rates, to variable rates. Therefore it is important to know what your credit card company is doing with your accounts at all times, in order to make sure you aren't being taken advantage of. Now's the time where you'll want to open up every letter you receive from your credit card company. Most of those letters won't be about purchasing some type of credit card protection anymore, but more likely to let you know about an interest rate increase which could really hurt you.