While few new credit cardholders thoroughly read every line of their cardholder agreement, many feel safe using a card from a recognized name. They believe federal regulations protect them from the credit card company taking advantage of its customers. However, while they may believe this, few actually know what regulations govern credit card interest rates. Here are some of the laws all cardholders should know:
- The interest rate cannot be changed within the first twelve months a consumer has an account. While there are a few exceptions such as promotional periods that expire, the card issuer cannot change the interest rate until at least twelve months have passed. Cards with variable APR can change as the Prime Rate changes.
- The lender must provide the cardholder with 45 days' notice before changing the rate except in regards to the exceptions above. Changing the APR to penalize borrowers who do not make their monthly payments is also allowed without the 45 days' notice.
- Banks are required by the CARD Act of 2009 to review the interest rate on all accounts every six months or less. They do not have to change the rate or make much of an attempt to gather new information on each borrower. For that reason, borrowers who have gained a significant amount of monthly income through a new job or other revenue stream may wish to contact the card company and ask for a manual review of their account. This can sometimes result in a lower interest rate.
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