Dear Creditnet: The issuer of my primary credit card just sent me notice saying they're raising the rate on my existing balance to 30 percent. My account is already into the thousands and I can barely make payments as it is! I have been a little late in the past, for which I will now be massively penalized. Is there anything I can do? Any recourse?
Answer: Retroactive interest rate hikes are banned by the CARD Act unless you're more than 60 days late making payments. So, since you mention that you were a "little late" in the past, I'll assume that means you were overdue by at least 60 days. Unfortunately, if you're more than 60 days late on your credit card payment, you don't have the right to opt out of an interest rate hike. And your credit issuer does have the right to apply the penalty interest rate to your account.
That's the bad news.
The good news is that the CARD Act also requires credit card companies to restore your interest rate to the previous lower level if you make six months of on-time payments. So, you have a few options here. First, do everything possible to make on-time payments for the next six months, and then follow up with the credit issuer to make sure your rate is immediately adjusted back to the lower rate. Or second, if you have good credit, you could secure a new 0 interest credit card and play the balance transfer game until your entire debt is paid off.
Both the Citi Platinum Select and Chase Freedom are no annual fee credit cards currently offering up to 15 months of zero interest on balance transfers. If you decide to take this route, be sure to read How to Choose and Use a Balance Transfer Credit Card first, and plan your repayment strategy carefully. Good luck!
