Answers About Changes to Credit Card Terms and Other Forms of Credit
Select from the following questions about changing the terms of credit cards, home equity lines of credit, and other personal credit.
- Can the bank change the account terms on my credit card account?
- How must the bank notify me when it changes a significant term on my credit card account?
- Can I reject changes to my credit card account?
- My credit card has a fixed rate. Is the bank allowed to raise it?
- How often can the bank change the rate on my credit card account?
- I just received a notice saying that the rate on my credit card account is going to increase in 45 days. Can I continue making purchases with my card at the existing rate for 45 days?
- After I made a late payment on my credit card, the bank notified me that it intends to raise my interest rate. Can the bank do that?
- The bank raised my interest rate because I made a late payment on an account with another bank. Can the bank do this?
- Does the bank have to give me advance notice of changes to my line of credit?
- Can I reject a change to my line of credit?
- Does the billing cycle have to be 30 days?
Can the bank change the account terms on my credit card account?
There are many types of changes the bank can make to your account, but there are also important protections for consumers. For example, there are limits on when the bank can raise your rate and certain fees.
Also, the bank generally must give you a written notice 45 days in advance of a change. You may have the right to reject the change, such as when the bank wishes to raise many types of fees. If you reject the change, the bank cannot apply it to your account.
Be sure to review your account agreement, which is the contract governing your credit card account. It provides information on changes that may occur to your account.
March 2010
How must the bank notify me when it changes a significant term on my credit card account?
The bank must provide advance notice in writing when it makes changes to account terms that are "significant" or when it increases the required minimum payment. An increase in the Annual Percentage Rate and increases in many types of fees are significant changes that require an advance notice. The notice must be mailed or delivered to you at least 45 days before the change becomes effective.
However, there are some cases when the advance notice requirement does not apply. If you agreed to the change, the bank does not have to provide advance notice, but it has to give you notice before the change becomes effective.
Also, there are some cases when no notice is required. For example, if you have a variable interest rate tied to an index, and the index goes up, the bank does not have to provide you a notice of an increased rate. The bank also does not have to provide you notice if your rate is increasing because a promotional rate no longer applies, and the bank already gave you information about the terms of the promotion. Additionally, the bank does not have to provide you notice if it closes your account, suspends future credit privileges, or reduces your credit line. The bank does have to provide you a 45-day notice before it imposes a fee or penalty because you exceeded a new, lower credit limit.
Be sure to review your account agreement, which is the contract governing your account. It provides information on changes that may occur to your account..
March 2010
Can I reject changes to my credit card account?
It depends. You can reject many types of changes to your credit card account, such as an increase in many types of fees. However, you cannot reject other changes, such as an increase in the Annual Percentage Rate, an increase in the required minimum payment, or a change that results from the bank not receiving your payment within 60 days after the due date. You also will not be able to reject changes such as a suspension of your credit privileges.
If you receive a notice that says you have the right to reject the change, the notice will give you instructions on how you can do so and the toll-free number to call.
Even if you can’t reject the change, you can still close your account if you want to avoid the change or not use your card for any more transactions.
March 2010
My credit card has a fixed rate. Is the bank allowed to raise it?
For credit card accounts, the term "fixed rate" usually does not mean that the rate can never be changed over the life of the account, although there are important limits. Starting February 22, 2010, banks cannot advertise a rate as “fixed” unless the ad also says how long the rate will be fixed and that it won’t increase during that period.
In general, if you opened your account on or after February 22, 2010, the bank cannot change your fixed rate for one year after the account was opened. There are exceptions to the general rule. For instance, if you agreed to an introductory rate that ends after six months or more or if you are more than 60 days late in making a required payment on your account, the bank can increase the rate that applies to your existing balances and new transactions.
If you opened your account before February 22, 2010, the bank does not have to wait 12 months to raise your rate for new transactions. But regardless of when you opened your account, the bank usually must give you 45-days advance notice in writing before the rate change goes into effect.
After the rate change goes into effect, the bank can apply the new rate to transactions that occur more that 14 days after it sent you the 45-day advance notice. The old rate will apply to transactions that occurred before that. There are also important limits on how quickly the bank can require you to pay off the existing balance when it does this.
If you wish to avoid the rate increase, you should consider contacting the bank to close your account or not using your card for further transactions.
March 2010
How often can the bank change the rate on my credit card account?
If your account has a variable rate, the rate is tied to an index that can change. The bank can change your rate periodically when the index changes. Your account agreement will explain when changes to your variable rate can occur.
If your account does not have a variable rate, there are important limits on when your rate can change. If you opened your account on or after February 22, 2010, the bank generally cannot change your rate during the first year after the account was opened. After the first year, the bank can change your rate, but it has to give you 45 days notice in writing before the change takes effect. And the new rate will only apply to transactions that occurred more than 14 days after the notice was provided.
There are exceptions to the general rule. For instance, if you agreed to an introductory rate that ends after at least six months or if you are more than 60 days late in making a required payment, the bank can increase the rate that applies to your existing balances and new transactions.
If you opened your account before February 22, 2010, the bank does not have to wait 12 months after your account is opened to raise your rate for new transactions. But it still has to give you 45-days advance notice in writing before the rate change goes into effect.
Be sure to review your account agreement, which is the contract governing your credit card account. It provides information on changes that may occur to your account.
March 2010
I just received a notice saying that the rate on my credit card account is going to increase in 45 days. Can I continue making purchases with my card at the existing rate for 45 days?
No, you will not be able to continue using your card for transactions at the existing rate for the entire 45 day period. The existing rate will apply to transactions that occur 14 days or less from the date the bank provided you the notice. After 14 days, the new rate will apply to further transactions. At the end of the 45-day period, the bank can begin charging the new rate for any balances you accrued after the 14th day after the bank sent the notice.
Please note that if your rate is increasing because you were more than 60 days late in making a required payment, the bank can apply the new rate to all your balances.
If you wish to avoid the rate increase, you should consider contacting the bank to close your account or not using your card for further transactions.
March 2010
After I made a late payment on my credit card, the bank notified me that it intends to raise my interest rate. Can the bank do that?
It depends. If your payment is more than 60 days late, the bank can raise your rate as long as it gives you a notice in writing 45 days in advance of the increase. The increase can be applied to your existing balances and new transactions.
If your payment was less than 60 days late, whether the bank can raise your rate depends on when you opened your account.
If you opened your account on or after February 22, 2010, the bank cannot increase your rate for making a late payment during the first year after the account was opened. After the first year, it can increase your rate if it gives you a written notice 45 days in advance of the increase. The increase will only apply to transactions that occurred more than 14 days after the notice was provided.
If you opened your account before February 22, 2010, even if the account has been open less than a year, the bank can increase your rate for making a late payment, but it must give you a written notice 45 days in advance of the increase. The increase will only apply to transactions that occurred more than 14 days after the notice was provided.
March 2010
The bank raised my interest rate because I made a late payment on an account with another bank. Can the bank do this?
It depends on when you opened your account.
If you opened your account on or after February 22, 2010, the bank cannot increase your rate for making a late payment to another bank during the first year after the account was opened. After the first year, it can increase your rate if it gives you a written notice 45 days in advance of the increase. The increase will only apply to transactions that occurred more than 14 days after the notice was provided.
If you opened your account before February 22, 2010, even if the account has been open less than a year, the bank can increase your rate for making a late payment to another bank, but it must give you a written notice 45 days in advance of the increase. The increase will only apply to transactions that occurred more than 14 days after the notice was provided.
Be sure to review your account agreement, which is the contract governing your credit card account. It provides information on changes that may occur to your account.
March 2010
Does the bank have to give me advance notice of changes to my line of credit?
Yes, in many cases. If you have a line of credit that is not secured by real estate, the bank must provide a written notice to each affected consumer when:
- there are changes to terms that are required to be disclosed up front (such as rates and many fees), or
- the required minimum payment is increased.
The notice must be mailed or delivered at least 45 days before the effective date of the change.
However, there are some cases when the advance notice requirement does not apply. If you agreed to the change, the bank does not have to provide advance notice, but it must provide notice before the change becomes effective.
Also, there are some cases when no notice is required. For example, if you have a variable rate that is tied to an index and the index goes up, the bank does not have to provide you a notice of the increased rate. The bank also does not have to provide you notice if your rate is increasing because a promotional rate no longer applies, and the bank already gave you information about the terms of the promotion. Additionally, the bank does not have to provide you notice if it closes your account, suspends your credit privileges, or reduces your credit line. The bank does have to provide you a 45-day notice before it imposes a fee or penalty because you exceeded a new, lower credit limit.
Be sure to review your account agreement, which is the contract governing your account. It provides information on changes that may occur to your account.
March 2010
Can I reject a change to my line of credit?
The Truth in Lending regulations do not require the bank to provide you with this option. However, the bank may give you this option for other reasons. If the bank tells you that you may opt out of a change, and you wish to do so, you should follow the instructions in the notice you receive.
Be sure to review your account agreement. It will provide information on changes to your account.
March 2010
Does the billing cycle have to be 30 days?
No, but the payment due date for your credit card bill must be the same day of the month for each billing cycle.
For more information, review the account agreement you received when you opened the account or contact your credit card company.
March 2010
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