Opting Out of Credit Card Interest Rate Increases

Under the current laws, credit card companies must inform you of interest rate increases. With the credit card reforms going into effect, you may have received some notices that your rates are going up. That means that your balances, and maybe even your minimum monthly payments are going to increase. These notices include an opt out option if you do not want your rate to increase. If you opt out, you will still owe your balance, but your interest rate will remain the same, and your account will be closed.

With so many people already struggling to make their minimum payments, these increases could push them into default and damage their credit. While credit card reform was supposed to help people burdened with overwhelming debt, the opposite is happening. The credit card companies are taking advantage of the last few days they have to cement their income and profits.

Should you opt out and close your account? That is a decision you will have to make for yourself. That said, if you are aggressively trying to pay off your credit card debt, accepting these new terms is going to put you further behind. You have to ask yourself if you really need that credit card. If not, let it go, pay it off and be done with that company. In the end, when you are debt free, hopefully you will have learned how to live on the money you have without borrowing any more.

If you have received one of these notices of changes to your account, and decide to opt out, you may be able to do that over the phone. Be ready for a surprise. If your account is in good standing they may offer you the option to keep your account open at the present interest rate. Surprise, they don’t want to lose your business. They are just hoping that you ignore that little notice that came in the mail so they can make more money off of you.

The company I just dealt with explained to me that in order to avoid charging their customers more money for services, they are increasing the interest rates. Excuse me, but I don’t see how that is not charging their customers more money. My interest rate was going to increase by 8%. And they wanted me to believe they were doing me a favor. I laughed at them.

If you need to keep your account open, call as soon as you receive a notice of change of terms. Complain loudly if you have to. Object to their practices, and let them know you disagree with what they are doing, and refuse to pay a higher interest rate. If they won’t budge, close the account and move on. You will be doing yourself a favor in the long run.

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