A:

You should first check that your credit card company is operating within your rights as a card holder. The U.S. Congress and President Obama signed the Credit Card Accountability, Responsibility, and Disclosure Act on May 22, 2009. The law is designed to protect an increasing number of people that are relying on credit cards to get through the current troubled economy.

Effective 2/11/2010, these new laws require that credit card companies give cardholders 45 days advance notice and an explanation of an interest rate increase; they prohibit credit card companies from increasing interest rates retroactively on existing balances unless the cardholder is more than 60 days late in making a payment; and if a cardholder's interest rate was raised for late payments, lenders are required to restore previously lower interest rates if the cardholder pays the minimum balance on time for six months.

If the credit card company has complied with the new regulations in raising your interest rate don't panic, you still have a few other alternatives. First, call the credit card company and explain your situation. Ask them if they will restore your credit card interest rate to the original rate - you may need to speak with a supervisor. If this doesn't work, consider transferring your balance out to a new credit card with a lower rate - be careful of balance transfer fees. Another option is to put your credit card debt on a home equity loan or some other type of consolidation account. Or, you can make the new minimum payments on time for six months, at which time (after Feb 2010) the credit card company is required by law to restore your interest rate to the previous lower rate.

For related reading, take a look at Expert Tips For Cutting Credit Card Debt and Should You Close Your Credit Card?

This question was answered by Steven Merkel.

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