Credit Repair

11 Possible Reasons Behind The Sudden Hike In Your Credit Card Interest Rates

There can be several reasons behind a sudden hike in your credit card interest rates. Reduction in your FICO score is probably the most common reason, but there are several other factors as well that might be responsible for the increase in interest rate on your credit cards. Following is a brief rundown on some of the other possibilities.

Change In Market Conditions

The change in market conditions is the most common excuse that companies often give behind increased rates. In such cases, it is not just you, but almost every credit card user gets affected.

Change In The Business Strategy Of Your Credit Card Company

Sometimes, the market conditions remain the same, but the business strategy of your credit card company changes. As part of their new strategies, the company may increase the rates for all their customers.

Illegal Use Of Credit Card

The above two reasons are applicable to all users, but many times, your own actions may also be responsible for such unpleasant experiences. For example, if either you or someone else has used your credit card for illegal purchases, the company has the right to either cancel your card or substantially increase credit card interest rates for you.

Violation Of The Agreement

When a credit card is issued to you, you are required to sign an agreement with the issuer. The agreement explains an array of terms and conditions. When you violate those terms, you rates are likely to be increased. If the violations are more serious, your card may get cancelled.

False Information Provided To Bank

If you provided false or manipulated information to your credit card company in an attempt to qualify for a low interest offer, the company may increase your rates once they find out the truth. You are strongly recommended to stay away from any such practices, as these are fraudulent activities and serious legal offences.

Bankruptcy Filing

Credit card interest rates also get affected if the credit card holder files for bankruptcy. In such cases, you should expect a substantial hike in the rates.

Bounce Checks

If you had issued checks to your creditors, but those checks got bounced due to insufficient fund in your bank account, this will have a negative impact on your credit score. A reduced FICO score means you are not able to meet your financial obligations thoroughly. The companies will treat you as a high-risk borrower, and so, it is very much likely that they will charge you interest at much higher rates than before.

Too Much Debt

If you have acquired too much debt, it may also go against you. Things can be worse if you are struggling with the repayment of those debts.

Too Many Credit Cards

Likewise, acquiring too many credit cards is also one of the worst financial moves, as it also affects your credit worthiness. This type of action makes you a high-risk borrower.

Credit Limit Is Reached Or Crossed

When you reach too close to your credit limit or cross it, it becomes another excuse for the credit card issuer to increase your rates. Even if you have reached or crossed credit limit on credit card issued by another company, it is likely to affect the interest rates on all cards.

Late Payments

Late payments are the worst culprits. If you are not making the monthly payment toward your credit card bills in a timely manner, your rates are likely to be increased. Just making the minimum monthly payment is also not a good idea. When your credit card debt balance grows faster, it starts turning you into a high-risk borrower.

Overall, if you are experiencing a sudden hike in your credit card interest rates, it is likely that one of the above explanations applies to you.


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Posted in Credit Repair, Debt And Credit | 1 Comment »

One Response to “11 Possible Reasons Behind The Sudden Hike In Your Credit Card Interest Rates”

  1. Dennis says:

    Credit card companies are always ready to increase the interest rate. They can do it on the sake of risk management or some thing else. The article has covered cash and every possible reason for the companies to do a hike in your interest rate. They can call it a Business strategy of their company. It may be done for some special user as an unpleasant surprise, if you are found of using the credit card in any illegal manner. The company can either go for a cancellation of your card or increase the interest rate for you. In case of any violation of the agreement is noted your rate will be increased. If you are trapped in debt of multiple loans, it will also affect the interest rate. Multiple credit cards can also give a hike to your interest rate. Bankruptcy filing will become a cause of great jump of interest rate. Bounced checks reflect your financial indiscipline and the company will be liable to charge more interest from you. The most important thing is if you are not regularly doing your payments, it will also give arise in your interest rate. Just keep in mind these important facts.

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