Been Rate Jacked? 3 Ways to Stand Up to Your Double Crossing Credit Card Issuer

Credit card rate hikes have become a popular strategy for lenders who want to purge their portfolios of less profitable accounts. New federal credit card regulations give consumers the power to reject a credit card rate increase, but only at the expense of an active credit line. "Freezing" a credit line to lock in favorable terms makes sense for consumers looking to cut their debt. However, this strategy can wreak havoc on credit scores by increasing your debt to credit limit ratio.

Plan A: Reverse Your Credit Card Rate Jack

According to CardRatings.com founder Curtis Arnold, an assertive request by telephone may be the only way to find a low interest rate credit card in today's marketplace. "Playing hard ball with your issuer is an essential first step in getting more favorable card terms," Arnold says. "Ask to speak to a manager if the customer service representative isn't able to help." Although banks have taken criticism for blanket credit card rate increases, customer retention specialists have the power to manually review accounts affected by repricing programs.

Plan B: Find a Low Interest Rate Credit Card Offer Elsewhere.

Some lenders may fail to offer you a better rate, regardless of your account history. Instead of tolerating your lender's dismissal, you can leverage the growing market for credit cards offered by regional banks and credit unions. Smaller institutions often offer more attractive account terms and have many of the same account features and perks as larger lenders. CardRatings.com maintains a list of current offers from smaller lenders who have already lured big bank customers by delivering stronger customer service along with competitive credit terms.  Here are a few examples of credit cards with competitive balance transfer offers and/or low interest rates:

  1. Chase Freedom®
  2. Discover it®
  3. Iberiabank Visa® Classic
  4. Simmons First Visa® Platinum

 

Preserving Your Financial Health After a Credit Card Rate Jack

Financial advisors recommend watching out for fees buried in the fine print of credit card balance transfer offers. A new card with an attractive introductory interest rate could carry a transfer fee as high as five percent. That kind of upfront cost may force you to endure a credit card rate increase from your current lender.

Closing your old credit card account can give you one less bill to open each month, but it can also hurt your credit score. Most financial advisors recommend that you do not close out such accounts. An older account with no annual fee and no monthly balance may even improve your credit profile. You should use your card once every six months or so to keep it active (inactive cards are increasingly being closed out by creditors). Simply buying a stick of gum will suffice.

According to Curtis Arnold, cardholders wield much more control over the banking industry than they might realize. "We do still have power as consumers and the way we exercise that power as it relates to credit cards is by using a card with decent terms," Arnold says. "Simply put, if we do this in mass, then the bad apples out there will be forced out of business."