Credit card debt is common for many Arkansas residents, and an increase in the interest rate on a card could result in difficulty overcoming such debt for those who may struggle to make even minimum payments. However, there are rules in place that restrict card issuers in their interest rate increases. These restrictions were put in place through the CARD Act of 2009. With recent high-profile changes by American Express, it is important to be aware of how an APR increase might affect one’s finances.

Restrictions on raising APR include the requirement that a 45-day notice be given prior to an increase becoming effective. Some individuals may choose to continue holding a card after such notification, but others might decide to close an account. There is no financial penalty for closing an account due to an interest change, but this could affect the holder’s credit score. Issuers may impose an increase in minimum payments in this scenario, or they might require full payment within five years. However, they may not require immediate payment, and they may not impose additional fees or penalties for account closures.

A rate increase can only apply to future purchases, meaning that prior purchases will not be affected by a rate change. However, late payments that are more than 60 days past due could result in a legitimate APR increase. In this case, making on-time payments for a 6-month period allows a card holder to earn back the prior rate.

An individual who is dealing with increases in APR due to non-payment or late payments may find that it is difficult to regain control of credit card debt if there are several accounts in play. In this scenario, it might be advantageous to discuss options like debt settlement and bankruptcy with an experienced lawyer.

Source: FOX Business, “Can My Credit Card Company Raise My Interest Rate?”, Christine DiGangi, Feb. 27, 2015