Buyer Beware: Interest rates aren’t stable.
The truth is, that even if you get a low interest rate, the credit card companies are very good at finding excuses to raise your rate. For example:
- Being late on a payment
- Raising your credit limit
- Opening up new credit accounts
These are some of the common reasons to raise your rate. But they also can change the rate for no obvious reason at all.
You should try to make the car issuer tell you what their rules are for raising the rate, but they are free to change rules at any time. And who likes to read fine print? So, it may be simpler just to be ready to drop one card and go for another on a moment’s notice. Don’t get lazy! They will take you!
Here is one story from a friend that illustrates a couple of the points made above:
One day he got a letter in the mail from the bank that issued his credit card. It said that they were raising his interest rate from 11.99% to 19%. He called them immediately and asked them why they were doing this. They told him over the phone that it was a misunderstanding. The notice was to tell him that his minimum payment would be raised, but his rate would stay at 11.99%.
A few weeks later he got his next credit card bill, and the interest rate was over 19%. Rather than start a fight with them, he paid off the whole bill with part of a home equity line of credit that he had opened at the very same bank! His new interest rate will be based on prime, and is currently 6.5%.
Read this startling story of "Industry Practices of Credit Card Issuers" told by Linda Sherry of Consumer Action in 2005. It discloses many instances of jumping APR's and consumer complaints.