Credit Card Terms May Change

Added July 30, 2008 by Katherine Merriam

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Summary: Trouble in the stock market and the economy recently has affected credit card companies just like any other business. You may think that if you pay your credit card bill on time every month and never go over your limit, that you're safe. Credit card companies may change the terms of your credit card at any time. What kinds of changes can credit card companies make? Does your behavior affect what action a credit card company takes on your credit limit?

Trouble in the stock market and the economy recently has affected credit card companies just like any other business. You may think that if you pay your credit card bill on time every month and never go over your limit, that you're safe. Unfortunately, this just isn't true. When credit card companies are feeling a pinch, they pass the trouble right on to their customers.

Many credit card companies promise you that your rate won't change until your card expires. However, in a 2008 survey of credit card companies conducted by Consumer Action, 77 percent of surveyed credit card issuers answered "Yes" to the question "Can you increase my APR or change my terms 'any time for any reason'?"

(An APR is an annual percentage rate: the interest rate a credit card company charges you for using your line of credit. Consumer Action is a consumer advocacy group based in San Francisco.)

Another trick used by credit card companies to get money from customers is to change your credit card limit. Most credit card users assume that their credit card limit will remain the same, or that the credit card company would warn them if the credit limit were going to change.

Common practices include "following a customer down" where the credit card company will continue to reduce your credit card limit as you pay off a large balance, leaving you hovering on the edge of your credit card limit.

Some credit card companies will reduce your credit card limit to an amount lower than your current balance, triggering over-limit fees. Other credit card companies simply change your credit card limit and you don't find out until your credit card is declined.

Sometimes the credit card companies will make changes that have nothing to do with the consumer. According to the Consumer Action survey, "Four of the top ten credit card issuers cited factors beyond a consumer's control that might cause interest rate increases such as: 'market conditions,' 'the economy,' and 'business strategies.'" Keep these survey results in mind and keep a close eye on your credit card statements. Any time you notice a change, call your credit card company immediately and make sure you understand the new terms.

Published: Jul 30, 2008

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