One of the most irritating things that can happen to us when we have a credit card is when our APR is raised for what appears to be a random reason. Sometimes you have no idea why it was raised and the customer service people can at times really have no idea.
Here I’m going to share some behind the scenes events that happen and which of the following can increase your credit card’s APR, or annual percentage rate.
This act can have an effect on many parts of our lives. Missing a payment has an effect on pretty much everything in your financial life. When you have missed payments, it is reported to the credit bureaus and then trickles down to all the rest accounts. In fact, one stat I found said missing just one payment could drop your FICO score as much as 90 to 110 points.
Credit Score Changes
Many recognize that this has an effect on the APR but also everything else you try to get on credit. Nowadays, this one will affect even getting a place to live and I’ve heard rumor that it can affect getting a job. This is one of the biggest parts of the big picture you have control over. The Balance has some tips for raising your credit score:
- Have open accounts active and in good standing
- Pay bills on time
- Keep accounts out of collections
- Reduce balances to around 10%
- Make sure balances are accurate in credit reports
- Leave old accounts open
- Open new accounts sparingly
- Keep different types of accounts
- and others
National Prime Rate Increases
The prime rate is the lowest possible interest rate you could pay. This is the base level so any change to it will increase your APR. Whatever happens with the prime rate will happen with your APR. Typically, this affects people with variable APR’s rather than fixed APR’s. Why is this? As the prime rate moves up or down according to the Fed, so does your APR.
Bank suffers Loss
This is something that has been happening a lot in our current world situation. Ever since 2008 and the financial collapse that happened during the great recession banks have been closing and merging and doing all kinds of things. The way banks handle a loss like this is they can override what they prime rate is and raise your rate even if you have perfect credit. This helps them try to recoup their loss and work towards getting back on track.
Because they Can and you don’t stop them
This just ties in with the above reason for a bank loss. To be honest, the goal of most banks is to please their shareholders and if they think there is something that may be headed in a bad direction, they can do this type of thing to try to head it off. Banks are there to make money, bottom line.
Many people just let this happen and don’t even call in to question it. Don’t let that be you. Customer service is there to answer questions you have to right to question what happens on your account so take advantage of it. Here are some reasons you may see them raise your rate:
- 60 days late on a credit card payment
- Prime rate goes up
- You have a variable rate and the prime rate goes up
The bottom line is that you have at least some control of what happens with your credit. Your annual percentage rate can be changed for things like the prime rate changing, financial changes in the markets, and definitely missed payments. The best practice is to be proactive and be aware of what’s going on so if something happens you will already be prepared for it when it does.
Mr O’Connor recognizes the potential there is in Online Marketing and the power of the written word. As such, he is trained in Copywriting, Affiliate Marketing, Blogging and the publisher of 4 Kindle books.
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