Dear Credit Card Adviser,
I opted out of a card agreement last July with First National Bank Omaha. They were going to charge me 15.99 (percent) so I closed the account and stayed with the 9.99 percent. I have been paying my payments on time ever since. This month they raised my interest to 13.99 because they said I missed the opt-out letter again. They said they can keep sending me opt-out letters to raise the rate whenever they want. Now I am stuck with a closed account at 13.99 percent.

I never heard of such a thing. I thought once I opted out and closed the account I was good unless I went late.

Any help would be much appreciated.
— Anita

Dear Anita,
Even after you opt out, under the existing terms, the bank may still reserve the right to raise the rate on your account with as little as 15 days’ advance notice. The terms and conditions for credit cards on First National Bank Omaha’s Web site indicate that the bank can raise the annual percentage rate, or APR, at any time for any reason.

The bank sends a new letter before each change in terms, according to a First National Bank Omaha representative who asked not to be named. Cardholders would have to opt out each time to avoid the latest change to their account. “Just because this individual opted out last July doesn’t save her from all the other change in terms,” she says.

In other words, opting out once doesn’t guarantee the rate on the existing balance. You have to read correspondence from your card company and opt out again if necessary.

Opting out also doesn’t always close the account. Sometimes it means you can’t use the card for future transactions. So make sure you understand the conditions of the opt-out before you reject the change in terms.

Once the Credit Card Accountability, Responsibility and Disclosure Act, or Credit CARD, Act takes effect February 2010, issuers won’t be able to apply a rate increase to an existing balance unless the borrower is at least 60 days delinquent, the variable rate is increasing due to the operation of an index or a promotional rate expires.

“So if the consumer cancels their card, the entire balance is protected as an existing balance,” wrote Chi Chi Wu, staff attorney at the National Consumer Law Center in Boston, in an e-mail response. Closure won’t trigger the default rate or require the cardholder to pay the debt in full immediately. The borrower won’t see a rate hike imposed on the outstanding balance unless one of those three exceptions applies, she says.

Unfortunately, this section of the law doesn’t go into effect until next year, which doesn’t help you at all right now. I would call customer service again to get that lower rate reinstated, explaining that you thought your opt-out last July was still in effect. Your other options are to pay off the balance or transfer the debt. Several balance transfer cards on Bankrate offer an ongoing rate below 13 percent. You’ll need a good credit score to qualify, though, and you should first consider all the caveats of transferring a balance.

Good luck!

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