Credit Cards Scramble to Jack Up Interest Rates
Is your credit card trying to milk more money out of you before new regulations kick in?
If you haven't been paying attention to your credit cards' interest rates, this is a good time to start. Bloomberg reports today that Wells Fargo is jacking up its cards' APRs by three points on November 30—which just happens to be one day before Rep. Barney Frank (D-Mass.) wants new protections for credit-card holders to kick in. Wells says it's just a big coincdence, but other card issuers including Chase, American Express, and Discover have also been bumping their rates and fees since Congress passed the Credit Card Accountability Responsibility and Disclosure Act in May. Some consumers are reporting rate hikes of more than 100 percent. So what's a cardholder to do in the face of this last-minute fit of money grubbing?
Under the new law, credit card issuers won't be able to increase your interest rate unless your payments are more than 60 days late, and if you then pay on time for six months, the original rate must go back into effect. That part of the law is supposed to kick in in February 2010—or December 1 if Frank prevails. But in the meantime, the law already gives you the right to tell your bank to take its higher interest rates and shove 'em. It's not a perfect solution—the higher rates can still apply to new balances and you might get your card cancelled—but it may be a lot more satisfying than having to suck up those extra percentage points in silence.