credit cards

Fact No. 1: No cap on credit card interest

8 little-known facts about your credit card
No cap on credit card interest

Even though you signed up for your credit card for its low interest rate, here's a scary, little-known fact: Many card issuers can raise interest rates as high as they like.

The top 10 banks that issue credit cards are federally chartered banks and don't have to follow state laws limiting interest rates, says Chi Chi Wu, staff attorney at the National Consumer Law Center.

"So they are free to set the rates as high as they want," Wu says.

Your interest rate is only protected for the card's first year (or first six months, if it's a teaser rate), under the Credit Card Accountability, Responsibility and Disclosure Act, or CARD Act. If you go 60 days late on a payment, that protection disappears. A variable rate tied to an index can also increase if the index goes up.

But if you've had the card for more than one year, the issuer can hike your rate even if you've been a model customer, says John Ulzheimer, president of consumer education for

Two caveats, courtesy of the CARD Act: That hike applies only to new charges (your current balance will be assessed the old rate). And the issuer has to give you 45-day advance notice.



Show Bankrate's community sharing policy
          Connect with us
Product Rate Change Last week
Balance Transfer Cards 16.23%  0.01 16.22%
Cash Back Cards 16.55%  0.07 16.48%
Low Interest Cards 11.59%  0.25 11.34%
Credit cards on a table

Get advice for managing credit cards, building your credit history and improving your credit score. Delivered weekly.


Credit Card Blog

Sheyna Steiner

US dragged into modern payment era

Soon, consumers get a full-fledged payment revolution with EMV cards. Will fraud decrease?  ... Read more

Partner Center

Connect with us