federal reserve

Cut your credit card rates

Issuers face a double pinch from a restrictive credit card law and high loss rates. Some cardholders have shared their pain -- in the form of higher interest rates. According to a June 2009 survey from Credit.com, about 19 percent of consumers reported an increase in their interest rate, up 4 percentage points from the company's February poll.

If you can't afford an interest rate increase, fight the rate hike. When you call, ask to have the lower APR reinstated. Give reasons why you deserve to have the old rate back, such as your high credit score, lengthy customer relationship or solid payment record. Be aware though, that a request for a lower rate can result in a credit check, and unfavorable information may trigger other adverse actions, such as account closure. Get a free copy of your credit report at AnnualCreditReport.com and dispute errors before you call.

Also ask if you can opt out of the increase. To reject the higher rate, you may have to close the account, which can harm your score. Read the Bankrate feature, "When to opt out of a rate hike," for more information.

If you have experienced multiple negative adjustments to your account, such as a rate and minimum payment increase, figure out which change you could live with if the creditor refuses to reverse both decisions. Attempt to compromise.

If your rate hasn't shot upward but you feel worthy of a lower rate, make sure you have a good credit score and a backup card ready in case the negotiation backfires.

Come February, issuers will have a harder time raising rates on existing balances because of the new credit card law. If you have a decent APR now, don't fix what isn't broken. Wait it out and soon your APR will be protected from arbitrary hikes.

You can compare credit card rates using Bankrate's search tool.

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MORTGAGE HOME EQUITY AUTO CDs CREDIT CARDS
Product Rate Change Last week
30 year fixed 4.28%  0.02 4.30%
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30K FICO-based HELOC 4.36%  0.02 4.34%
50K FICO-based HELOC 4.06% --0.00 4.06%
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1 Year CD 0.93%  0.03 0.90%
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