Interest Rate Hikes And What You Can Do About Them

May 24th, 2009 • Related • Filed Under • by trisha

Change is on the horizon but it might come too late for consumers already struggling with high interest credit card interest-rate-hikes debt. There is no doubt the credit card reform that is about to become law will provide protection from unfair billing practices. Unfortunately for card holders who already carry a balance, these changes might be a little too late. Millions of card holders have already seen interest rate hikes that have doubled or tripled. If you fall in this category, there are steps you can take to try to keep your rates lower.

It never hurts to ask- If you have seen an increase in your interest rate and have a good history with your credit card company, you should contact them to see if they will lower your rate. This strategy has been popular in the past with mixed results. Consumers should be prepared for an uphill battle to get a reduced rate since the credit card industry is not exactly noted for accommodating the requests of card holders at this time. With that in mind, there is no harm in making the call. It could save you thousands of dollars and if it doesn’t, there is no harm done.
Opt out of higher interest rates- Card holders may have the option to opt out of the higher rate. This requires paying off your balance at your current rate without making new purchases. If you choose this option your current rate will remain in place however using your account, even one time will trigger the higher interest rate. Carefully read any information that accompanies your credit card statement or other correspondence you receive from the card issuer to ensure you understand the terms before agreeing to them.
Shop for a better rate- If you are not satisfied with the terms and conditions of your current account, start seeking a better deal elsewhere. Balance transfer offers are not as lucrative as they once were, but they are still available. Before moving your balance, calculate how much money you will save by transferring your balance. To do this, consider balance transfer fees and the length of time you will be able to take advantage of the lower introductory offer.

The final and most effective way to avoid the negative consequences of high interest rates is by managing your credit wisely. Consumers who manage their accounts responsibly reduce or eliminate the consequences of late fees and high interest charges by paying their balance in full each month. Of course many people are beyond the point where paying off the balance in one month is feasible. If there was ever a time to aggressively tackle debt the time is now. Research the options available to you and develop a strategy to get out of debt once and for all.