Retroactive Interest Rate Hikes Will Be a Thing of the Past
Credit card changes are coming. Many people are finding themselves with the dilemma of credit card companies changing there existing interest rates on their existing balances. This placing many who have been consistently on time in a very difficult situation. The new minimum payments jump drastically in many cases.
Help is on the way. Come next February, card issuers will no longer be able to retroactively raise rates on your existing balances unless you’re more than 60 days late on your account. Instead, they will only be able to raise your rate on new purchases going forward.
Say you have $10,000 in debt on a card with a 10% annual percentage yield. Once the new rules take effect, even if the rate jumps to 15%, you’ll still pay the old rate on that balance. The difference in rate means you can eliminate the balance four months faster and save $1,276 in interest. And even if you do miss your payments by more than 60 days and see the rate on that old balance jump higher, issuers must revert to the original, lower rate after you make six months of on-time payments, says Duncan Douglass, a partner with Alston & Bird, a law office in Atlanta.
To Prepare: Issuers have been jacking up interest rates across the board. If you carry a balance, make sure it’s on a card with a low rate come 2010.
At HOPE we help our clients stay updated about existing law changes so they can make wise credit decisions. If you would like to know more please call our staff at 704-503-3669. We are waiting on your call.