The new laws that have been brought into effect from February 22, 2010 will restrict the number of times that the banks can increase the interest rate on a credit card. The law is called the Truth in Lending Act and is a federal law that protects consumers against lenders. It requires the banks to give a peripheral days advance notice before increasing your credit card interest rate. It also requires the banks to provide the customer with the option of opting out of the changes in the interest rate. If you choose to opt out you will be allowed to pay the current balance at the prevailing lower rate but the creditor will likely close your account after you have done so. The creditors are not always required to notify the consumer before increasing the interest rate on the credit card. If the rate increase is due to a delinquency or sleep payment, the creditor doesn’t have to warn you of a rate increase. To some time back there was a practice in effect called Universal Default. This practice allows the credit card issuer to increase your credit card interest rate without letting you know if you’ve defaulted on another credit card. The terms and conditions of increase in the credit card interest rate are usually mentioned in the fine print of the credit card agreement. A creditor can typically increase credit card interest rate when you’re in violation of the any terms and conditions of the contract or the interest rate in the market has gone up.