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Credit Card Rate Changes: Reading the Notice Before It Takes Effect

A credit card's interest rate and other terms may change over the life of the account. The reason for the change matters, as do the balances affected and the notice explaining it. Keep the notice with your agreement and compare the new terms with your payment plan before continuing to use the card in the same way.

The questions below use selected Consumer Financial Protection Bureau guidance, adapted and organized by Fynoptic. Source links and the dates displayed by those sources are provided at the end.

When can my credit card company increase my interest rate?

Credit card companies can usually increase your interest rate if they give you 45 days of advanced notice, but there may be steps you can take to lower your credit card interest rate.

Your card issuer generally must give you 45 days of advanced notice before it raises yourcredit card interest rate for new purchases you make with that card. Card companies are generally restricted from raising the interest rate for your existing balance, but there are certain exceptions.

Interest rate changes for new credit card purchases

A credit card company is generally not permitted to increase your interest rate on new transactions during the first year of your credit card account.

After that initial year, they’re required to provide 45 days of notice before an interest rate change, and any purchases you make with the card more than 14 days after the advanced notice are considered new transactions.

Interest rate changes for an existing credit card balance

A card company is not permitted to increase your interest rate on your existing purchases, except under the following circumstances:

  • A temporary rate – such as a low rate on a balance transfer – expires. That temporary rate must last for at least 6 months.
  • You have a variable interest rate and the index to which your rate is tied (for example, the U.S. Prime Rate) has increased.
  • Your minimum payment has not been received within 60 days after the due date.
  • You successfully complete or fail to comply with the terms of an arrangement with your card issuer to lower your interest rate. · Your protections under the Servicemembers Civil Relief Act (SCRA), if applicable, expire.

Lowering your credit card interest rate

If your credit card company increased your interest rate after giving you a 45-day advanced notice, it generally must review and re-evaluate the interest rate for your account at least every six months.

The card issuer may – and in some circumstances must – compare the rate you’re being charged with the rate the card issuer would charge you today if you applied for a new card. If your rate is higher than what you would be charged as a new customer, the card issuer must reduce your rate. However, this rate will not necessarily be as low as your original rate.

If your rate increased because of certain factors, including being late on a payment, the card issuer may consider whether the factors that led the increase still apply.

For example, you may also be able to lower your interest rate by consistently making your payments on time. If your rate increased because you were more than 60 days late in making a payment, the card issuer must reinstate your old interest rate if you make six consecutive on-time payments of your minimum balance after the effective date of the increase.

Contact your card issuer if you believe your interest rate was increased in error.

Can my credit card company change the terms of my account?

The credit card company has the right to change the terms of your credit card agreement. For significant changes, the card issuer generally must give you notice 45 days in advance.

Significant changes generally include increases in certain interest rates and fees, increases to the minimum amount due, or changes to the grace period or the way interest is calculated. You might not receive notice 45 days in advance about changes to the benefits you get from your credit card, such as points or cash rewards, or changes in the brand (for example, changing from Visa to MasterCard or vice versa) because these changes are generally not considered to be significant.

There are restrictions on what changes the card company can make. For example, card companies generally cannot increase the interest rate you pay on existing balances, except in certain circumstances.

For many changes, you have the right to opt out of the newly changed terms. However, if you opt out, the card company might close your account. If your account is closed, you do not have to pay the balance in full immediately after the account is closed, but you are still responsible for making payments until the balance is paid in full. Depending on the card company’s policies, your minimum payment may increase. The amount of the new payment cannot be more than the amount needed to pay the balance off in five years or double your prior minimum periodic payment, whichever is higher.

Note:Closing your account may negatively affect your credit score because closing the account will lower the amount of available credit you have and increase the percentage of available credit you are using.

When does a credit card company decide what interest rate to offer me on a credit card?

The credit card company may decide which interest rate to charge you based on your application and your credit history.

Tip

Lenders (including credit card companies) generally will have to disclose your credit score (and related information) if they use the score and, based in whole or in part on any information in your credit report to deny your application, increase the cost of your credit, or offer you a higher rate than other consumers get from that lender (when the offer has more than one interest rate).

You may ask the card company what your interest rate will be before applying. However, the card company might not be able to answer until it has your credit information.

Credit card companies typically offer their best rates to customers who have the highest credit scores. If you choose to apply and receive a rate higher than you applied for because of information contained in your credit report, the credit card company is required to provide you the name, address, and telephone number of the credit reporting company that provided the credit report the card company used to make its decision. If the card company used a credit score to make its decision, it also must provide you with the credit score it used as well as information to help you understand the credit score, including the key factors that adversely affected your credit score.

Why did I get a low credit limit on a credit card?

There are a variety of reasons you may have been offered a credit card with a low credit limit. To understand why, you can examine your credit report or, in some circumstances, request more information about the decision from the lender.

Credit card companies usually determine your credit limit only after you’ve applied for a credit card. To make this assessment, they generally review your credit report and history as well as the income information you provided on your application.

If you’re issued a credit card with a low credit limit, it could be for a number of reasons, including:

  • Poor credit history
  • High balances with other credit cards
  • Low income
  • Small credit limit for that specific card

There are some circumstances in which it is possible to find out more about the factors that went into that determination, including:

  • If you were turned down for one card and offered a different card with different terms that you do not expressly accept, the credit card company has to tell you the reasons it denied your application. If the credit card company says you can apply for a different card with different terms than the card you applied for, the card issuer must provide key disclosures about the new offer on or with the application.
  • If a card issuer decreases your credit limit on an existing card, the credit card company generally must give you an “adverse action notice.” While card issuers can increase or decrease your credit limit without giving you notice, this adverse action notice must provide specific reasons for the action taken or allow you to request a statement of specific reasons.

In order to better understand the factors related to your financial situation that may have contributed to your low credit limit offer, you can examine your credit report. You are entitled to a free credit report every 12 months from each of the three major consumer reporting companies (Equifax, Experian, and TransUnion).

Learn more about credit line decreases

Sources and further reading

The CFPB source passages are U.S. government work in the public domain. Fynoptic has selected, organized, and adapted the material for this guide, including corrections identified through the additional sources listed above. Sources accessed October 27, 2026. This use does not imply agency endorsement or affiliation.

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