No more arbitrary rate hikes2 of 7In the past, if you missed one payment to another creditor, your credit card issuer could jack the interest rate on your balance. The CARD Act banned this practice of "universal default" on existing balances. That is, issuers cannot increase the interest rate on existing credit card debt. There are four exceptions to this rule, however.The law permits a rate increase on a balance if your payment is 60 days or more past due; if your account has a variable interest rate and the rate hike is due to index movement; if the increase is due to the expiration of a promotional interest rate; or if a workout agreement has ended. Rate hikes on existing debt for other reasons aren't allowed.However, the issuer can raise the annual percentage rate on new charges after the first year following account opening, but must provide 45 days' advance notice of the change.« Back to Credit Card Rules. Related Articles:Fees your card can raiseNo help for business cardsCan you co-sign for card?Related Links:CARD Act limits penaltiesCARD Act 'gotchas'Credit card billing changes advertisement
In the past, if you missed one payment to another creditor, your credit card issuer could jack the interest rate on your balance. The CARD Act banned this practice of "universal default" on existing balances. That is, issuers cannot increase the interest rate on existing credit card debt. There are four exceptions to this rule, however.
The law permits a rate increase on a balance if your payment is 60 days or more past due; if your account has a variable interest rate and the rate hike is due to index movement; if the increase is due to the expiration of a promotional interest rate; or if a workout agreement has ended. Rate hikes on existing debt for other reasons aren't allowed.
However, the issuer can raise the annual percentage rate on new charges after the first year following account opening, but must provide 45 days' advance notice of the change.
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A little research could save you BIG on interest.