Many consumers are finding that even though they have had the same credit card for years, and have paid the balances off completely every month, their monthly statements are suddenly appearing with a surprise: An interest rate hike by as much as three percentage points.

Some consumers are not worried about these interest rate hikes because they pay their credit cards off completely every month, but because this experience is not unusual by any means, some consumers are beginning to worry. Right now it seems as if numerous banks are beginning to boost the credit rates for consumers of all types, not only consumers that have poor credit or late payments. Customers that have an excellent repayment history and excellent credit are experiencing the same boosts in their interest rates as customers with less than perfect credit. Lenders are blaming increases like these on the higher fund costs, and climbing numbers of defaults that are occurring. Consumer advocates are saying that banks are looking for any possible way to recoup their past losses, and before new rules limit the interest rates and fees tha they can charge, they are trying to increase everyone's interest rate at least a little.

Luckily, there are still options for credit customers that play by the rules. Interest rates may creep even without you realizing it, so the first step is simply going to be to keep an eye on your statements, making sure that nothing is out of the order. Credit card companies like to gradually increase your rate over time, but they may also hit you with a big interest rate hike if you are late in repaying your bill or keep your balance run up too high over time. Although this is an industry wide trend, there is still something that you can do. While banks say that they have no choice but to raise their interest rates, most good credit customers can try to negotiate lower rates with their credit card companies.

Interest rates only really affect those who carry a credit card balance from month to month, so if you cannot negotiate a lower rate, what you can do is keep your credit card balances low to eliminate the worry associated with high interest rates. Unfortunately, many Americans do carry revolving debt, and almost all of this revolving debt is on credit cards. In America alone there is more than $970 billion dollars in revolving debt, according to the Federal Reserve. More than 60 percent of all Americans have some form of credit card debt, and the average person has around $7,200 in debt according to a recent study conducted by the financial company Charles Schwab.

Above all else, keep in mind that your credit card company needs to notify you if they intend to raise your interest rate, so you have some time to accept the change before it goes into effect in most circumstances.

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Originally posted 2009-02-26 05:53:53. Republished by Blog Post Promoter

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credit cards, Personal Finance

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