One should never ignore letters in the mail from their credit card company. Even if 1 out of 10 communications in not a new credit card offer, the financial value in knowing the upcoming changes to one’s account is enormous.
One notice in particular is worth paying attention to: a notice for a change in one’s interest rate on their card. Interest rate changes on a card definitely impact your decisions regarding prioritization for debt paydown. Sandra Block at USA Today summarizes concisely the new law from Congress on credit card terms and how it impacts your options.
First, if one’s credit card interest rate is changed and tied to the prime rate before the law goes into effect, then a 45 day advanced notice is not required for a lender to provide a credit cardholder with the new, lengthy advanced notice. That said, a new, higher interest rate on one’s credit card means debt can be repaid at the new, higher rate, or you can pay off the existing debt at the lower, previous interest rate. With the latter situation, though, the lender can close the credit card account upon completion of repayment of the debt balance on the card, which will in turn increase your credit utilization ratio, and thus negatively impact your credit score.
Clearly, debt management is more important than ever, yet increasingly complex. Consider an online debt management tool like DebtGoal.com to manage and and pay down debt in the mathematically most efficient way possible.
Raj Patel writes for DebtGoal.com, a do-it-yourself system for getting out of debt and lowering your interest costs. DebtGoal.com incorporates all of the techniques discussed in this post and can help users understand and get visibility to and manage their debt finances.
Tags: credit card interest rate law, credit card interest rate regulation, credit card laws, new credit card interest rate rules
