Can My Card Company Raise My Rate Without Notice?

Q: My credit-card company raised my rate without notifying me. Is that allowed under the new law?A: Credit-card issuers must inform you 45 days prior to any increase in your interest rate and fees, or certain other changes in terms and conditions, under the Credit Card Accountability, Responsibility and Disclosure (CARD) Act of 2009. (Increases in your monthly minimum payment due and reductions in your credit limit aren’t covered.) When you receive the notice, you have the option of either accepting the rate increase or opting out — meaning, you pay off the balance at the existing rate and close the account (or, leave the account open and make no future purchases).

Unfortunately, that 45-day rule isn’t a guarantee: A provision of the new law allows your card company to charge the new, higher interest rate on any purchases made more than 14 days after the notice of the rate change is mailed. Legislators allowed this 14-day rule to discourage cardholders from abusing the system by running up card debt before the higher rate kicks in.

If your card rate was increased and you don’t recall receiving any such notice prior to the rate hike, contact your card issuer to complain. If the card issuer refuses to resolve the issue to your satisfaction, you can file a complaint with the Federal Trade Commission here. (The FTC doesn't mediate individual disputes, but it tracks complaints to crack down on widespread abuses.)

These changes are among a slew of new rules imposed by the new law to help protect consumers from onerous fees and deceptive credit-card company tactics. Starting this week, card companies can no longer charge you more than $25 for making a late payment for the first time — if you’re late again within six month, the fee can jump to $35, under the CARD Act. The law also prohibits card issuers from charging over-limit fees that are higher than the amount you went over. So, for example, if you exceed your card limit by $25, the card issuer can’t charge you more than $25 for the mistake.

In response to the new rules, card issuers have been steadily boosting rates to make up for lost revenues. The average rate on new credit-card offers rose last week to 14.35 percent, up from 14.14 percent six months ago, according to card-data tracker CreditCards.com. The average is composed of about 100 of the most popular credit cards in the country. (Introductory rates are not included in the calculation.) If you have bad credit, the numbers are even more painful: The average rate on new card offers to those with less-than-stellar credit rose last week to 21.04 percent.