Blogging for Change

Consumers concerned about high credit card interest rates

by Kim McGrigg on
11/20/2008
in Using Credit

On Tuesday, MMI was one of nine organizations that participated in an all day call-in event called Your Money Marathon. During the course of the day, we had received a whopping 14,000 phone calls. It quickly became clear that callers shared some common concerns and I wanted to address these concerns in the blog. Yesterday, I talked about settlements. Today, I would like to talk about rising credit card interest rates.

Credit card interest rates are being raised even though the Fed has cut interest rates. Rate hikes can have a huge impact a person’s financial situation—particularly those who are on the edge financially. Here are a few rate-hike scenarios and suggestions on how to handle them.

-If you get a letter in the mail saying that your rate is being hiked due to no fault of your own, read the fine print—you may have the chance to refuse the change. In many cases, you are given a chance to refuse the term change if you write to the creditor. This action would mean that you are no longer able to use the card, but you would be able to repay any balance at the original rate.

-If you are late on a payment and trigger the default rate, you might want to communicate with your creditor. A creditor does not have to readjust your rate upon request, but some people claim that they have had success with this tactic. If your initial call is unsuccessful, ask to speak with a supervisor. Be clear about what you want, but not confrontational.

-If a temporary setback resulted in actions that triggered a default rate, ask your creditor if they will place your account on a temporary hardship program. Many creditors have programs in place to help consumers recover from unexpected setbacks such as a job loss or medical emergency.

-If you are unable to lower your rate, you can try to seek a card with more advantageous repayment terms. However, consumers who have less than an excellent credit score may find it more difficult to qualify for a new credit card account. Also, there is nothing to say that your new card’s lower rate won’t be raised in the future.

Finally, if you are having trouble making minimum payments on high interest debt, do not allow the problem to escalate. Talk to a certified credit counselor to see if they can work out a revised payment plan with your creditor.

Of course, the best thing you can do is to reduce your reliance on credit entirely. (I do realize that this is easier said than done.)

Kim McGrigg is the former Manager of Community and Media Relations for MMI.

Recommended Articles

Retired man and his dog
Take Control of Your Credit
Your credit is much too important to leave to chance. If you have questions about your credit report and credit score, consider scheduling a one-on-one credit report review.
Learn More
Learn more
  • Better Business Bureau A+ rating Better Business Bureau
    MMI is proud to have achieved an A+ rating from the Better Business Bureau (BBB), a nonprofit organization focused on promoting and improving marketplace trust. The BBB investigates charges of fraud against both consumers and businesses, sets standards for truthfulness in advertising, and evaluates the trustworthiness of businesses and charities, providing a score from A+ (highest) to F (lowest).
  • Financial Counseling Association of America Financial Counseling Association of America
    MMI is a proud member of the Financial Counseling Association of America (FCAA), a national association representing financial counseling companies that provide consumer credit counseling, housing counseling, student loan counseling, bankruptcy counseling, debt management, and various financial education services.
  • Trustpilot Trustpilot
    MMI is rated as “Excellent” (4.9/5) by reviewers on Trustpilot, a global, online consumer review platform dedicated to openness and transparency. Since 2007, Trustpilot has received over 116 million customer reviews for nearly 500,000 different websites and businesses. See what others are saying about the work we do.
  • Department of Housing and Urban Development - Equal Housing Opportunity Department of Housing and Urban Development
    MMI is certified by the U.S. Department of Housing and Urban Development (HUD) to provide consumer housing counseling. The mission of HUD is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD provides support services directly and through approved, local agencies like MMI.
  • Council on Accreditation Council On Accreditation
    MMI is proudly accredited by the Council on Accreditation (COA), an international, independent, nonprofit, human service accrediting organization. COA’s thorough, peer-reviewed accreditation process is designed to ensure that organizations like MMI are providing the highest standard of service and support for clients and employees alike.
  • National Foundation for Credit Counseling National Foundation for Credit Counseling
    MMI is a longstanding member of the National Foundation for Credit Counseling® (NFCC®), the nation’s largest nonprofit financial counseling organization. Founded in 1951, the NFCC’s mission is to promote financially responsible behavior and help member organizations like MMI deliver the highest-quality financial education and counseling services.