Do Credit Card Issuers Have to Tell You Before They Raise Your APR?

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There are a few ways the Federal Reserve’s decision to raise its benchmark interest rate will affect consumers, one of them being consumer debt. If you have a loan or credit card with a variable interest rate, you’ll probably see your APR and monthly payments rise along with the rate hike. Most consumers know what’s coming, but let’s say you haven’t been paying attention. Does your issuer have to notify you when your interest rate rises?

Credit issuers don’t have to give a heads-up about changes to the APR on a variable-rate card resulting from changes to the benchmark rate. You agreed to those types of changes when you opened an account with a variable APR. “If it’s a variable rate, there isn’t any requirement to notify them, because it’s already been disclosed in the disclosures they get when they open the account,” said Nessa Feddis, deputy chief counsel for Consumer Protection and Payments Center for Regulatory Compliance Government Relations Regulatory & Trust Affairs at the American Bankers Association.

But that doesn’t mean you’ll never get a note in the mail alerting you that your rate is being increased. The CARD Act of 2009 changed requirements on when, what and how credit card issuers must disclose information to card holders. So if your credit score drops and your issuer reviews your account, it could raise your APR because it views you as a greater lending risk, and you would need to be notified in this case. (You can keep an eye on your credit scores every month on Credit.com to track where you stand.)

Due to the CARD Act, most credit cards switched to a variable APR, Feddis explained. “As interest rates rise, credit card interest rates will rise,” she said. Your issuer must disclose your APR in periodic account statements, which you can check online or by calling the number on the back of your credit card.

If you have balances on credit cards with variable APRs, your minimum payment may increase. But ideally if you have credit card debt, you’re working to pay it off so you won’t have to worry about bigger balances.

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