Home > 2016 > Credit Cards

Help! My Credit Card APR Just Went Up

Advertiser Disclosure Comments 0 Comments

Credit card issuers have to let you know at least 45 days in advance that your annual percentage rate (APR) is going to rise, thanks to a law change in 2009. But the heads up doesn’t exactly take the sting out of knowing that your credit card balances are about to get more expensive, particularly if you’re already working hard to pay one down.

Fortunately, there are a few steps you can take to prevent the increase from completely busting your budget. Here’s what to do if your issuer lets you know your APR is climbing.

1. Find Out Why

There are lots of reasons why your APR may be on the rise. Anyone with a variable-rate credit card, for instance, will likely see their APR go up alongside a rate increase made by the Federal Reserve, since the two are tied directly together. Alternately, a rate increase could be related to your personal spending habits — issuers periodically review their cardholders’ credit and may change the terms and conditions associated with an account if they see a dramatic drop in a cardholder’s credit score. (You can keep an eye on your credit scores for free every month on Credit.com to track where you stand.) If you’re unclear as to why you’ve received a notice about your APR, call your issuer for clarification. Once you know what’s driving their decision, you can take the right steps to address it.

2. Check Your Credit

If your rate increase is tied to your credit score, you’ll want to understand what derogatory information may be holding it down. Conversely, if you’re weathering a rate hike through no fault of your own, it may be time to shop around for a new credit card (more on that below) — and you’ll want to be sure your credit score is in good shape so you can qualify for the very best offers — and, specifically, a lower rate than the one you currently have. You can get your free credit reports by visiting AnnualCreditReport.com.

3. Take Steps to Improve Your Score

You can maintain a good credit score by making all payments on time, keeping debt levels below at least 30% and ideally 10% of your available credit and adding a mix of credit accounts organically over time. You can fix your credit by pinpointing your credit score killers, starting a positive payment history and cleaning up your credit report. (You can also use this guide to learn how to dispute errors with the three major credit reporting agencies.)

4. Comparison Shop

Once you’re confident in your credit score, you can shop around for a new credit card. Look into a low-interest credit card or a balance transfer credit card, which lets you transfer an existing high-interest debt to a new card with little-to-no interest for a period of time (typically 12 to 18 months). You can read our recent ranking of the best balance transfer credit cards in America here to help you pick the best offer.

Keep in mind, too, any offer you receive could be used as leverage to get your current issuer to reconsider your APR hike. Just be sure not to apply for too much new plastic all at once. Each credit card application generates a hard inquiry on your credit report, which could subsequently ding your credit score.

5. Address High Balances

If you can’t qualify for a new credit card and your issuer is sticking to their rate hike, you will want to pay down any balance you are carrying on that credit card as soon as possible to minimize the cost of that debt.

Under the 2009 CARD Act, the notice of an APR change must give you the opportunity to close the account. And, if you decide to do so, the issuer can’t charge a penalty fee, place you in default just because you close your account while you still owe a balance, or require you to pay your balance in full immediately. Your card issuer can, however, require you to pay back your balance over five years, or double your previous minimum monthly payment. Keep in mind, closing a credit card could hurt your credit score.

You can attack credit card debt generally by looking into debt consolidation loans, signing up for a debt management plan and redrafting your budget to see if there are any additional dollars you could put toward your balances each month.

More on Credit Cards:

Image: Creatas

Comments on articles and responses to those comments are not provided or commissioned by a bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by a bank advertiser. It is not a bank advertiser's responsibility to ensure all posts and/or questions are answered.

Please note that our comments are moderated, so it may take a little time before you see them on the page. Thanks for your patience.

Certain credit cards and other financial products mentioned in this and other articles on Credit.com News & Advice may also be offered through Credit.com product pages, and Credit.com will be compensated if our users apply for and ultimately sign up for any of these cards or products. However, this relationship does not result in any preferential editorial treatment.

Hello, Reader!

Thanks for checking out Credit.com. We hope you find the site and the journalism we produce useful. We wanted to take some time to tell you a bit about ourselves.

Our People

The Credit.com editorial team is staffed by a team of editors and reporters, each with many years of financial reporting experience. We’ve worked for places like the New York Times, American Banker, Frontline, TheStreet.com, Business Insider, ABC News, NBC News, CNBC and many others. We also employ a few freelancers and more than 50 contributors (these are typically subject matter experts from the worlds of finance, academia, politics, business and elsewhere).

Our Reporting

We take great pains to ensure that the articles, video and graphics you see on Credit.com are thoroughly reported and fact-checked. Each story is read by two separate editors, and we adhere to the highest editorial standards. We’re not perfect, however, and if you see something that you think is wrong, please email us at editorial team [at] credit [dot] com,

The Credit.com editorial team is committed to providing our readers and viewers with sound, well-reported and understandable information designed to inform and empower. We won’t tell you what to do. We will, however, do our best to explain the consequences of various actions, thereby arming you with the information you need to make decisions that are in your best interests. We also write about things relating to money and finance we think are interesting and want to share.

In addition to appearing on Credit.com, our articles are syndicated to dozens of other news sites. We have more than 100 partners, including MSN, ABC News, CBS News, Yahoo, Marketwatch, Scripps, Money Magazine and many others. This network operates similarly to the Associated Press or Reuters, except we focus almost exclusively on issues relating to personal finance. These are not advertorial or paid placements, rather we provide these articles to our partners in most cases for free. These relationships create more awareness of Credit.com in general and they result in more traffic to us as well.

Our Business Model

Credit.com’s journalism is largely supported by an e-commerce business model. Rather than rely on revenue from display ad impressions, Credit.com maintains a financial marketplace separate from its editorial pages. When someone navigates to those pages, and applies for a credit card, for example, Credit.com will get paid what is essentially a finder’s fee if that person ends up getting the card. That doesn’t mean, however, that our editorial decisions are informed by the products available in our marketplace. The editorial team chooses what to write about and how to write about it independently of the decisions and priorities of the business side of the company. In fact, we maintain a strict and important firewall between the editorial and business departments. Our mission as journalists is to serve the reader, not the advertiser. In that sense, we are no different from any other news organization that is supported by ad revenue.

Visitors to Credit.com are also able to register for a free Credit.com account, which gives them access to a tool called The Credit Report Card. This tool provides users with two free credit scores and a breakdown of the information in their Experian credit report, updated twice monthly. Again, this tool is entirely free, and we mention that frequently in our articles, because we think that it’s a good thing for users to have access to data like this. Separate from its educational value, there is also a business angle to the Credit Report Card. Registered users can be matched with products and services for which they are most likely to qualify. In other words, if you register and you find that your credit is less than stellar, Credit.com won’t recommend a high-end platinum credit card that requires an excellent credit score You’d likely get rejected, and that’s no good for you or Credit.com. You’d be no closer to getting a product you need, there’d be a wasted inquiry on your credit report, and Credit.com wouldn’t get paid. These are essentially what are commonly referred to as "targeted ads" in the world of the Internet. Despite all of this, however, even if you never apply for any product, the Credit Report Card will remain free, and none of this will impact how the editorial team reports on credit and credit scores.

Our Owners

Credit.com is owned by Progrexion Holdings Inc. which is the owner and administrator of a number of business related to credit and credit repair, including CreditRepair.com, and eFolks. In addition, Progrexion also provides services to Lexington Law Firm as a third party provider. Despite being owned by Progrexion, it is not the role of the Credit.com editorial team to advocate the use of the company’s other services. In articles, reporters may mention credit repair as an option, for example, but we’ll also be sure to note the various alternatives to that service. Furthermore, you may see ads for credit repair services on Credit.com, but the editorial team isn’t responsible for the creation or implementation of those ads, anymore than reporters for the New York Times or Washington Post are responsible for the ads on their sites.

Your Stories

Lastly, much of what we do is informed by our own experiences as well as the experiences of our readers. We want to tell your stories if you’re interested in sharing them. Please email us at story ideas [at] credit [dot] com with ideas or visit us on Facebook or Twitter.

Thanks for stopping by.

- The Credit.com Editorial Team