Ask the Dollar Diva By Dorothy Rosen • Bankrate.com

Getting pushed around by plastic

Dear Dollar Diva,
My credit card company recently increased my APR to 28 percent! I have never missed a payment and have never made a late payment. They stated that the 28 percent APR would apply to existing balances as well. Is this legal? I immediately canceled the card, but it will take me a few months to pay it off. I read that by canceling the card, they may have to continue charging the previous APR -- depending upon the state laws where the company is, in this case, Maryland. Any help you can provide would be appreciated.

Is it legal? Unfortunately, it probably is. Search the fine print of the credit card company agreement. Chances are you agreed to this when you accepted the card. It may be legal, but the Dollar Diva thinks it stinks.

The state laws that apply to the credit-card company are those of the state where the company incorporated. Your company incorporated in Delaware, not Maryland. Too bad. Maryland has a 24 percent cap on interest rates.

The good news is, according to Delaware law, the company has to let you pay off your balance at the old rate if you do two things:

• Do not make any new charges at the new rate

• Close your account

You say you immediately canceled the card, so we'll assume you did not make any new charges at the new rate. Congratulations for your smart actions.

The Diva joins you in being unhappy with credit card companies when they do things like that and reminds you that playing with credit card companies is worse than playing with fire. Whether you're careful or not, you can get burned. They can legally charge these usurious rates, and the only sure way to win is to be aware of their practices and not charge more than you can afford.

DOROTHY ROSEN has a master's degree in finance, with a specialization in accounting, from the Kellogg Graduate School at Northwestern University in Evanston, Ill. Rosen has more than 15 years of experience in the financial arena, serving in Illinois and Florida as a certified public accountant, financial consultant, expert witness and educator. She is owner of Dorothy Rosen, CPA, a public accounting firm that serves individuals and small businesses.