The interest rate on your credit card directly affects the cost of transferring the balance on your credit card. You can start at a low interest rate, but your rate may not always stay the same. A credit card issuer may increase your interest rate in certain circumstances, but may not always notify you in advance.
Mandatory Notice of Interest Increase
Banks must send a notice of interest rate hike at least 45 days before the increase.
This is a requirement for the Credit Expiration Act, a federal law that protects consumers from lenders.
During this 45-day period, you have the option to opt out of interest rate increases if you were to pay more with your current interest rate balance. A rejection will allow you to keep a lower interest rate. However, if you choose to cancel, the creditor may close your account.
If you do not respond to the notice of interest rate hike, the credit card issuer may apply a new interest rate to any new purchases made within 14 days of the notification being sent.
When notice of a course increase cannot be required
Credit card issuers do not always need to send a notice to raise interest rates before raising the rate. If the increase in the rate is due to criminality or default, the creditor need not warn you about the increase in the rate. Typically, these penalty increases are reflected in a credit card agreement so far.
For example, if you have a delay of at least 60 days on your credit card payment, the card issuer may increase your interest rate without sending you an interest rate increase notice or giving you a chance to choose. A credit card issuer also does not need to give you a notice as to whether your interest rate has increased because the promotional course has expired.
Most credit cards these days have a variable rate that is tied to a base rate, such as a primary rate or LIBOR. If that basic interest rate goes up, your credit card APR may also go up. The credit card issuer does not have to send you advance notice before raising your rate in this circumstance; your credit agreement will indicate to what rate your APR is tied and how it responds to index changes.
Reducing unfair interest rate increases
Contact your credit card company for an unexplained increase in interest rates. They will be able to explain why your interest rate has increased. If the increase in the exchange rate is a mistake, you may be able to pay back the old interest.
You can file a complaint with the Consumer Financial Protection Bureau if you believe your interest rate has been increased incorrectly or your credit card company has increased your rate without giving you proper notice.