APRs are variable ratesThe federal Credit Card Accountability, Responsibility and Disclosure Act, or Credit CARD Act, makes it more difficult for credit card issuers to increase APRs. However, the APR on an existing balance can be raised if a promotional rate ends, an underlying market rate increases or the cardholder misses a payment by more than 60 days. Most rate increases now require 45 days' notice.
Rate reductions are rareConsumers have three avenues to get a lower APR on a credit card balance.
The first option is to call the issuer, perhaps making reference to other, better offers, and ask outright for a lower rate.
"It's a simple phone call, and the worst they can say is no," Hasson says.
The second option is a formal debt management program, in which the issuer allows a consumer who is overwhelmed by debts to commit to regular payments at a lower APR with the goal of paying off the balance.
The third option is a hardship plan, in which the issuer lets a consumer who has suffered a financial setback pay off the balance at a reduced APR.
A debt management plan may be set up with the help of a credit counseling agency while a hardship plan is usually offered by the credit card company.
Either option may trigger closure of the account, which could harm the consumer's credit score, depending on how the issuer reports that event to the credit bureaus.
"If they are giving you a break, they aren't going to let you incur additional debt," Hasson says.
Pay it offConsumers who pay the full balance on their credit cards on time every month can ignore APRs. Since they don't owe any revolving debt, they don't have to pay any interest.
"The only caveat," Bialek says, "would be if you missed (a payment) one month, and then (interest) would be charged."
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