The Credit Card Act of 2009 made great strides in protecting credit card users from some unfair practices that used to be common. But that doesn’t mean your credit card’s APR can never go up. Here are 5 times your credit card issuer can raise your rate:
Your promotional rate is ending
Promotional rates typically last six to 12 months. After that, your issuer is free to raise your rate. Your new rate will depend on multiple factors, but your credit score will be a big one. The Card Act specifies that issuers must give you at least 45 days’ notice before making a major change to the terms of your account — but an expiring promotion is exempt from this rule.
You are 60 days late on your payments
Paying a credit card bill late usually triggers a late fee, and if you are 30 days late, it could damage your credit score. Things get even worse when you are 60 or more days late. At that point, your issuer will be able to impose a penalty APR, which could be as high as 29.99 percent.
Your credit score has dropped substantially
Credit card issuers periodically review your account and personal information. If it spots a change it doesn’t like — such as a significant drop in your credit score — it can raise the interest rate on a card you already have. You get 45 days’ notice of the change and the rate applies only to new purchases.
The prime rate is going up
Most credit cards have a variable APR, meaning that the interest rate on the card is tied to the direction of interest rates in general. Most credit card companies set rates linked to the prime rate, which is the rate banks charge their biggest, best customers for loans. If the prime rate rises, the interest rate on your credit card will rise, too.
You have had the card at least 12 months
Card issuers generally can’t raise the rate on a card you have had for less than a year. There are exceptions to this, including a 60-day delinquency or a change to the prime rate. But if a year passes and your issuer wants to raise your rate, it’s permitted to. Again, though, you must receive 45 days’ advance notice of the change.