One of the consequences of the recently enacted Credit CARD Act is that many credit card issuers are changing some of the terms of their agreements. This can include providing you notice that they are changing the fee structure, as well as changing your interest rate. It’s true that credit card issuers aren’t supposed to raise interest rates on existing balances (except in a few cases), but they can up the interest rate on your new transactions.
So, what can you do when the credit card issuer changes terms? Unfortunately, you don’t have a lot of recourse. The issuer has to give you notice, so you have some time to decide on your course of action. In most cases, though, there are only two decisions:
- Accept the change
- Reject the change — and close the account
It is worth noting that if you choose to reject the change and close the account, it is best if you have paid off your balance. If you plan to reject the changes, it is wise to plan to have the balance paid off before the change goes into effect. Otherwise, your account will be closed, and you will continue paying off your balance. But it will appear on your credit report, and it is often not the best situation.
Accepting the Change
There are many situations in which you might want to keep your credit card account open, including for purposes of having the car available for emergencies, as well as for keeping your credit score in good shape with your credit utilization ratio and your the length of your credit history. In that case, you might have to accept what the issuer decides to do.
However, you might be able to avoid some changes. If you are are good customer, you might be able to call and ask that the changes not apply to you. When one of my credit card issuers announced it was implementing a $59 annual fee, I called and asked for it to be waived. It was. You might also be able to get a lower interest rate by calling, or have a late fee waived if you normally make your payment on time.
If you are a good customer, it is in the best interest of the issuer to work with you. However, if you are threatening to close the account and move on, you need to be prepared to carry through. The credit card issuer may not make accommodations, and you may need to carry out your threat.
While you don’t have a lot of pull, you do have some. When the credit card issuer decides to change terms, consider your options, and see if you can get a better deal.