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Credit card interest rate increases

A number of South Carolina residents may be about to receive notices that the interest rate on their American Express card is increasing. Although the 2009 CARD Act has limited credit card companies' ability to increase card holder's interest rates, it is still possible, as about a million people with American Express cards are finding out.

Issuers are able to raise interest rates only if they have given holders at least 45 days advance notice, at least in the case of what are considered significant increases. Additionally, under federal law, these increases can only apply to new purchases and cannot be retroactive. People may also close a credit card account without a penalty for doing so, but they may be requested to pay off their balance immediately.

Despite the fact that people have the right to close an account without being fined for doing so, it is not always the best option because closing a credit card account may have a negative effect on someone's credit rating. If this is a concern, people are urged to avoid adding new purchases, which will incur the higher interest rate, and to pay off their balance as quickly as possible.

Credit card rate increases can come at a time when someone is already having trouble paying off credit card debt. In some circumstances, filing for personal bankruptcy may allow people to get out from under burdensome financial obligations, as bankruptcy can result in the discharge a variety of types of unsecured debt upon a successful completion of the process. A lawyer can explain what is involved in the process and can also outline the eligibility requirements associated with Chapter 7 and Chapter 13.

Source: FOX Business, "Can My Credit Card Company Raise My Interest Rate?", Christine DiGangi, credit.com, Feb. 27, 2015

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