When can my credit card company increase my interest rate? What can I do to get the rate back down?
Your credit card company can generally increase your interest rate for new transactions, as long it gives you notice 45-days in advance. New transactions are ones that occur more than 14 days after provision of the notice. However, a credit card company is not permitted to increase your interest rate on new transactions during the first year after an account is opened.
A card company is not permitted to increase your interest rate on existing balances, except when:
- A temporary rate (such as a low rate on a balance transfer) expires. The temporary rate must last at least 6 months;
- You have a variable rate and the index to which your rate is tied (for example, the U.S. Prime Rate) has increased;
- Your minimum payment has not been received within 60 days after the due date. The card company must give you notice of a rate increase 45-days in advance;
- You successfully complete or fail to comply with the terms of a workout arrangement if your interest rate has been reduced as part of a workout arrangement; or
- The Servicemembers Civil Relief Act (SCRA) ceases to apply, if your interest rate had previously been reduced under the SCRA.
If your rate is increased because you were more than 60 days late, you can get your old interest rate reinstated if you make six on-time required minimum periodic payments in a row after the effective date of the increase.
If your credit card company increased your interest rate after giving you 45-days’ advance notice, it generally must review the account at least every six months. If appropriate based on the review, your card issuer must reduce the interest rate.
If your interest rate increased because you were more than 60 days late in making a payment, focus on making on-time payments. If you pay your minimum amount on time for the first six consecutive months after the rate increase, the credit card company must reinstate the prior rate on your existing balance.