Why would my credit card APR rate double within one month?

Question

I am so confused! Im not very knowledgable about credit card intricacies, even though I have one..one with a substantial amount of debt on it.

My credit card APR has always been 17.15% and I usually make all of my payments right on time, but because of some unforseen problems last month I didnt make the payment on time. This months statement says that my APR is 32.24%. I am aware that you are charged a fee for late payment, which my account has been charged, but why would my APR be so high??

While I can appreciate that many of you do not know my situation, so I cant blame you for your tone..my credit problem is not the result of careless buying or unrealistic ideas..I dont think it is right to assume that. Life hands you circumstances and you do your best...thats all that needs to be said. Either way, I appreciate the honest information. Since I have been very careful to make payments on time, I was not familiar with the policy of changing the APR to a "penalty" rate. I have called and resolved the issue, they did drop me to my original rate. Thanks to everyone for the heads up...

Answer 1

Well it could be based on some factor that lets it move up for a number of reasons. One the initial rate could be only good for a short period of time. Two if you are late, over the limite, etc. your rate will go up on the next billing cycle - since you missed a payment or at least were late they probably took the opporunity to raise it to the maxiumum level. You can call and tell them what caused you to be late but don't expect a lot of relief, if you can swith to another card pitch that to them.

Answer 2

"... I usually make all of my payments right on time ..."

There is your problem. If you are late one time, they let it slide with just the late fee. If you're late a second time, you go to the default rate. Don't be late again. Some cards drop your limit down and the interest will throw you over limit.

You have fallen into the credit card trap. You ran up a big balance. Were careless in paying on time. Probably only made the minimum payment. Now you've got that huge interest increase and your minimum payment is going to almost double as well.

Stop charging. Get on a strict budget. And throw every penny onto this card to get it paid down. If you make on time payments for a year, they may return you to the better interest rate. But the sooner you pay off this card the better.

Answer 3

i know you were just so over joyed to get the card and run as fast as you could to the mall and charge away == OK now that you have did that set down and read the fine print of the contract you sign up to -- which you should have known by heart before you made your first charge== was there a grace period on the 17.15% -- did it say if you were late a payment we are going to raise the rate -= i hope it does not say the next time you are late we will take you new born baby === they did nothing wrong -- just living up to their side of the contract and hopeing you do the same!!!

Answer 4

It is usually stated in the fine print of your credit card agreement that a higher default interest rate will be applied to your account if you miss a payment, or are late with a payment. Most, if not all, credit card companies do this.
You can try to negotiate with the company and see if they will re-instate your previous APR.

Answer 5

You just answered your own question. 32.24 is a default rate. Credit card company doesn't need to notify you when they charge you the default rate because you're late on your payment.

I don't know what credit card you have but BOA will change the rate to the default rate if you're late twice in 12 rolling billing cycles.Also if you're over the credit limit, it automatically goes to the default rate. The default rate will effect as of the first date of the billing cycle as soon as you're late or over the credit limit.

Read their terms and conditions.

Answer 6

It says very plainly on the application and card member agreement that is what would happen if you missed a payment. You could try calling customer service with a pity pitch and see if they would give you grace and reduce your apr back to where it was.

Answer 7

it doubled because it CAN and because when you signed the ageement with the cc company, you gave them permission to raise that apr any time they felt like it. unfortunately, that's the way it is. realistically, cc companies look at a number of factors, the main one being your credit report and if there is anything on it that they don't like, they will raise the interest rate. The only way you have of getting it down is normally to go though a debt management plan with a credit counseling agency. There are a few reputable ones out there, the main one being MMI--money management international. www.moneymanagement.org

Answer 8

you need to read the fine print that comes with your card because they can automatically increase your interest if you are late on your payments without notifying you.