WALLINGFORD, CT, June 19, 2009
/24-7PressRelease/ -- Legislators' moves to reign-in the credit card industry have not stopped major credit card companies from hiking interest rates for millions of Americans.
Citing economic conditions, American Express, Bank of America, Citibank, Capital One, and HSBC are the latest financial institutions to announce interest rate increases.
Bank of America is one of the most recent banks that has decided to increase interest rates for customers. Effective in June, any Bank of America credit-card customer who carries a balance and has an interest rate below 10 percent will see his or her rate jump into double-digit territory. According to the Wall Street Journal, this could affect as many as 4 million card holders.
Connecticut Better Business Bureau President, Paulette Scarpetti, says interest rate increases are never welcomed by consumers, but for many, the timing couldn't be worse.
"A growing number of Americans wrestling to pay down their credit card debt are learning that they have to change their spending habits and how to manage credit responsibly. Federal legislation aimed at restricting unfair credit practices is not going to take effect until next year, but there are things consumers can do now to bring credit card interest rates under control."
The House and Senate both have passed legislation that would prevent credit card companies from enacting retroactive rate hikes, force them to give more advanced notice of rate increases,
and put into place other measures that would give consumers a break from much-criticized practices, including raising interest rates on existing balances, extending the notification period for rate increases from 15 days to 45 days and eliminating a practice that allows a card issuer to raise rates if it learns there was a late payment on another credit card.
One of the best ways to avoid a sudden interest rate hike is to use credit cards responsibly which includes paying bills on time and not carrying a balance.
Connecticut Better Business Bureau offers the following advice for fighting back against skyrocketing interest rates:
Contact your credit card company:
While most interest rate hikes affect only customers who carry a balance, some customers in good standing have seen their rates increase as well. Anyone who believes their rate was increased by mistake should contact their credit card company. There is evidence that credit card companies might be willing to negotiate rates in order to keep cardholders as customers, so it doesn't hurt to contact the company and discuss options.
Pay off the account:
If the cardholder doesn't want to accept the new rate, they can choose to keep their current rate and pay off their outstanding balance, as long as they don't make any new purchases. If any new purchases are made, the higher rate will be enforced.
Look for a better deal elsewhere:
Other credit card companies might be offering better deals, such as low introductory rates that will give the holder a less expensive way to pay down debt. There are many Web sites that compare current credit card offers, including bankrate.com/credit-cards, so shop around for a better deal.
Keep an eye on new regulation:
The Federal Reserve and Congress have passed legislation, effective July 2010, that could reform the credit industry and increase oversight to restrict certain practices such as arbitrary interest rate hikes and exorbitant rates.
More advice on managing credit responsibly is available at http://www.bbb.org.
About Better Business Bureau Connecticut
Founded in 1912, BBB is an unbiased non-profit organization that sets and upholds high standards for fair and honest business behavior. BBB offers objective advice and a wide range of education on topics affecting marketplace trust. BBB also offers complaint and dispute resolution support for consumers and businesses. Today, 128 BBBs serve communities across the U.S. and Canada, evaluating and monitoring more than three million local and national businesses and charities. For more advice on finding companies and businesses, start your search with trust at http://www.bbb.org
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