Home > Credit Cards > I Have Good Credit, So Why Is My Credit Card APR Going Up?

Comments 0 Comments

You never thought this would happen to you, but there it is: an advance warning (as required by law) from your bank that your credit card’s annual percentage rate is going up in 45 days.

You check all your major credit reports because a little birdie once told you that a drop in credit score could lead to an issuer ceremoniously changing the terms and conditions on your credit card account — even if you happen to be paying that particular card off responsibly. (And also, you know, unexpected dips in your credit scores could be a sign of identity theft.)

But, nope, seems all is well and good in the land of your scores. So, what gives?

Any Number of Things

Well, honestly, it’s hard to say.

“There is no way to provide a definitive answer,” Eric Lindeen, vice president of marketing for ID Analytics in San Diego, California, which offers fraud prevention tools and credit risk management scores to issuers, said in an email. That’s because the increase could be related to a number of things. And it may not even be personal — issuers can be applying a change in terms to individuals, yes, but they can also be rolling them out across their portfolio.

As an example, let’s say you receive notice that your cash advance APR is rising.

“The increased rate may be related to new benefits, since [the issuers] need to balance the cost with revenue,” Lindeen said. “It could also be related to increased risk in their portfolio for cash advances.”

Or, maybe, just maybe, your issuer crunched some numbers and found you, in particular, were more apt to pay for that capability. (Side note: credit card cash advances generally have high APRs associated with them already — which you start accruing instantly — so it’s a good idea to avoid taking one out whenever possible.)

“A rate change could even be driven by statistical modeling that predicts someone in your credit band who needs a cash advance is willing to pay more,” Lindeen said. “Price elasticity models are used in many industries to set pricing on individual products, though the idea is fairly new in banking.”

What You Can Do

Remember, issuers are permitted to change terms and conditions on their credit cardholders, though — thanks to the CARD Act of 2009 — certain ones, including those related to APRs, require at least 45 days notice. If do receive one of these notices in the mail, you can call your issuer and ask what prompted the change. You can also ask them to reconsider. (Just note that this request might generate a hard inquiry on your credit report, which can ding your credit score, should your issuer deem a credit pull is necessary to determine whether it is OK or not to issue the reversal.)

And, if your credit is good, you can consider shopping around for a new credit card with a more favorable APR and/or better benefits. After all, one of the perks of a good credit score is the ability to qualify for the better products on the market. Just be sure to read the fine print of any credit card you are considering carefully to be sure it’s right for you (and your spending habits).

Be sure you can, in fact, qualify for that particular piece of plastic before filling out that its application. Otherwise, you risk generating a hard inquiry on your credit reports, which, again, could ding your credit score. (You can see where your credit stands by pulling your credit reports for free each year at AnnualCreditReport.com and viewing two of your credit scores, updated every 14 days, for free on Credit.com.) And if you ever discover your credit needs some sprucing up, you can do so by paying down high credit card balances, limiting those credit inquiries and disputing any errors on your credit report.

Image: gpointstudio

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