Fighting a Credit Card Rate Increase

Fighting an Increasing Rate
by Scott Bilker

Scott Bilker is the author of the best-selling book "Credit Card and Debt Management." He is also the Editor and publisher of the FREE DebtSmart® E-mail Newsletter (http://www.debtsmart.com). Sign up today!

Scott,
I had a card that had a fixed rate of 5% on my balance. I closed the account years ago when I started taking control of my debt. Since this was the lowest rate of the cards I had I was only paying the minimum and concentrating instead on paying off other high interest credit. I received a notice with one of my invoices that they would be increasing the rate to 20% and that I basically didn't have a choice in the matter (fine print). I transfered the balance over to other cards that would have a lower APR than the 20% they would be imposing however this severely limited my available credit for emergency purposes.

Just wanted to know if it is legal for them to increase the rate on a closed account and if there was any other option for me to consider. Obviously this would be information for any future similar situations. Thanks!
--Mike

Answer
Mike,

Do you have the original paperwork that gave you the fixed rate of 5%? I truly hope so because it's that documentation that could ultimately help you keep that rate. The only problem is that you did transfer the balance but you did so because you thought they wouldn't keep the rate at what they promised.

I see this happen frequently that's why I ALWAYS keep copies of the letter, terms, conditions, etc. in my files for just such a situation. I even photocopy applications!

If this happened to me, and I found evidence that they couldn't raise the rate, then I might even contact a lawyer and see what could be done. I would also contact the Federal Trade Commission and other consumer groups to see if they could help me make the bank honor their agreement.

For the future...get everything in writing and keep it in a file!

Good luck and please let me know what happens.

Scott

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