New idea to fight credit card interest rate hikes: put your card on hold

A new wave of bad news is hitting many mailboxes this week. More banks are sending out notices of interest rates hikes. I got hit with a new one and have gotten emails from people upset about the "change of terms" pamphlet that just showed up. 

I followed my own advice and called my bank to play the rate battle game. The first customer service representative went through the speech I've heard before, "the rate increase is due to the current economic climate and there is no negotiating." My only options are to accept the new rate: A whopping 26%!! Or opt out and close the card.

So I requested a supervisor. When she finally came to the phone she rattled off the same thing, but gave me a third option. "Opt out of the rate increase, keep your current lower interest rate but don't close the card, just don't use it."  (Closing a credit card may ding your credit rating a bit.) She said to call back in 6 months and perhaps the "economic climate" would be better and I could get a lower interest rate.  Basically saying, the bank is pretty much up the creek right now, but they are hopeful things will turn around. I chose option #3 "hope". 

An important note about this option: If you use the card during this "on hold" period you are signaling the bank you want to re-activate your account, which will 'opt you back in' to the higher interest rate. Make sure you change any monthly automated payments you have linked to that credit card, like a gym membership or Netflix, to another credit card ASAP.

For more on why banks are raising interest rates and other ways to fight the hike, click here.

To view reader's comments, tips and advice on this from The Consumerist, click here.

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