• 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.

Interest Rate Hikes And What You Can Do About Them was created by and is property of American Consumer News.

Legislation in Congress is on a fast track to being reconciled and then sent on to the President’s desk for his signature. He has said that he wants to have it by Memorial Day, and what a day it would be in terms of the effects of the new guidelines if they become law. Here is how the new legislation is shaping up to affect you as a card holder:

Caps on interest rates. There is a move to place a cap on interest rates that credit card companies can charge their members. Currently as an amendment there is a 15% limit, but whether it will survive and be included in the eventual final bill is uncertain. The struggle is between those who believe that credit card companies have to have some way to make money in response to the credit markets as they rise and fall, and those who advocate strict limits on what banks can charge in interest. They say that the unlimited rate increases are one of the practices that are hurting consumers the most on their accounts.

Limits on raising rates. In addition to this, card issuers would be prohibited from increasing rates on existing balances unless the card holder is over 60 days late on their payments. And, a 45 day notice would be required before interest rate increases could take effect.

Payments applied. Credit card issuers would have to apply payments that are sent in to the balances with the highest interest rates first, instead of last. This means that those balances would go down sooner and the consumer would pay less in interest charges.

Additional restrictions. Another amendment that is being considered would make it easier for retailers to offer discounts to buyers who choose to pay for purchases with cash, checks, or debit cards. This would not only give incentives to consumers, but would prevent credit card companies from continuing to collect their fees that they charge merchants in the processing of credit card transactions.

Banned would be the practice of increasing rates on a card holder’s balances based on late payments to a different card and account. This is known as the ‘universal default’ practice.

Credit card companies would have to restore a lower, original interest rate if the card holder stayed current six months after a late payment.

The overall story. While the final bill has yet to emerge and the question remains if it will have teeth for consumers or become so watered down as to be rendered ineffectual. Meanwhile, consumers have clearly had enough and are defaulting in record numbers as well as using their cards less, and trying to build up small savings to help defray the costs of living.

Experts have warned that it was bound to happen, that circumstances and practices would eventually bring about a crisis in the credit card market. The best advice appears to be to keep making your payments and attempting to decrease your balances. Unless you can obtain a good balance transfer card in order to defray the interest rate charges while you get a handle on your other cards and accounts. The new rules and regulations would not go into effect immediately so you will still need to remain responsible with your credit cards.

How New Credit Card Laws Could Affect You was created by and is property of American Consumer News.