Bank of America recently raised the ire of customers — and some in the government – when it raised the interest rates for customers with low interest rate credit cards who carried balances on those cards. Suddenly cardholders who had been paying less than w% interest were facing huge increases in those rates, along with large increases in their monthly payments. This move by Bank of America followed similar moves by other credit card lenders, including household names like Chase and Citibank.
Fortunately for consumers banks are required to notify their customers when an interest rate increase is in the works Unfortunately many consumers do not even bother to read those notifications. This can leave customers at a decided disadvantage and cause them to betaken by surprise when that new and larger credit card bill arrives
One of the best things consumers can do to protect themselves is to open – and read – every piece of mail they receive from their credit card issuers. While these notices are often written in legalese, it is possible to skim through them and look for upcoming credit card interest rate hikes. Then, armed with that information, those consumers can decide what steps to take.
The best course of action is to simply pay off the balance before the interest rate increase takes effect. If this is an option it is a good idea – the credit card issuer cannot charge the higher interest rate if the full balance has been paid off.
If paying off the entire balance is not an option a good alternative is to pay off as much as possible while at the same time searching for a card with a lower interest rate. Even in this age of tight credit there are still 0% credit card offers out there. You may need a good credit score to snag one, but if you can get one of these cards you may be able to pay off your balance more quickly and avoid high interest charges Just make sure you know when the 0% interest rate will expire – and be sure your balance is paid in full before that date arrives
For consumers who find themselves stretched by their minimum payments and upset with the way credit card companies have abused them, there is help on the way. The Federal Reserve, in conjunction with bank regulators and the Federal government, has passed new rules that will limit the ability of banks to raise credit card interest rates at will. The good news is that these new rules will help to cut down on the most egregious abuses of the credit card companies The bad news is that the new rules will not go into effect until July of 2010, so until then consumers will have to take the steps necessary to protect themselves from these abuses.