When can my credit card company increase my interest rate?
Credit card companies can usually increase your interest rate if they give you 45 days of advanced notice, but there may be steps you can take to lower your credit card interest rate.
Your card issuer generally must give you 45 days of advanced notice before it raises your credit card interest rate for new purchases you make with that card. Card companies are generally restricted from raising the interest rate for your existing balance, but there are certain exceptions.
Interest rate changes for new credit card purchases
A credit card company is generally not permitted to increase your interest rate on new transactions during the first year of your credit card account.
After that initial year, they’re required to provide 45 days of notice before an interest rate change, and any purchases you make with the card more than 14 days after the advanced notice are considered new transactions.
Interest rate changes for an existing credit card balance
A card company is not permitted to increase your interest rate on your existing purchases, except under the following circumstances:
- A temporary rate – such as a low rate on a balance transfer – expires. That temporary rate must last for at least 6 months.
- You have a variable interest 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.
- You successfully complete or fail to comply with the terms of an arrangement with your card issuer to lower your interest rate. · Your protections under the Servicemembers Civil Relief Act (SCRA), if applicable, expire.
Lowering your credit card interest rate
If your credit card company increased your interest rate after giving you a 45-day advanced notice, it generally must review and re-evaluate the interest rate for your account at least every six months.
The card issuer may – and in some circumstances must – compare the rate you’re being charged with the rate the card issuer would charge you today if you applied for a new card. If your rate is higher than what you would be charged as a new customer, the card issuer must reduce your rate. However, this rate will not necessarily be as low as your original rate.
If your rate increased because of certain factors, including being late on a payment, the card issuer may consider whether the factors that led the increase still apply.
For example, you may also be able to lower your interest rate by consistently making your payments on time. If your rate increased because you were more than 60 days late in making a payment, the card issuer must reinstate your old interest rate if you make six consecutive on-time payments of your minimum balance after the effective date of the increase.