The list of scary credit moments is provided as a list of situations that you should be forewarned against. The situations can come up at any time without warning. If you are aware that they can happen you can be better prepared for them.
This post is about the credit scary moment where your credit card interest rate increases. Typically a creditor is required to give a 45 day’s notice to the consumer before increasing the credit card interest rate. The creditor may choose to increase the interest rate on the credit card number of different reasons. He can increase the interest rate if you have defaulted on a payment, being in violation of any of the terms and conditions of the credit card contract or because the interest rate of the market has gone up. This time back a creditor could also increase interest rate on a credit card because he defaulted on any other loan officers according to a room called the Universal Default.
Earlier a creditor was required to give the consumer a 15 day notice before increasing the credit card interest rate along with an option to opt out of the highest interest. Now according to the new laws that have been brought into effect on February 22, 2010, the creditor is required to give a 45 day’s notice to the
Consumer about the oncoming increase in the interest rate along with giving him an option to opt out. Choosing to opt out of the right interest rate will allow you to pay down the current balance at the original interest rate. However the creditor is most likely to close down your credit card account after that.
A creditor may not be required to inform a person about the increase in the interest rate if the increase in the interest rate is due to the person defaulting on the payment on the credit card.
In order to be prepared for the eventuality that your credit card rate may increase you should make sure that you have other credit cards as well. You should also try and make all your credit card payments on time although not all increase in the interest rate is due to bad payment history of the consumer. It can be a frustrating situation when your creditor increases your credit card interest rate in spite of few having a positive payment history. If you decide to opt out of the high interest rate you must remember that the creditor is most likely to close down your credit card account after you have paid off your current balance. You should ensure that you have other open credit cards so that your credit utilization ratio is not affected much by the closure of one credit card.