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How to React to a Interest Rate Jack

The bad news is in. Your credit card issuer has sent a change in term notice of an impending interest rate hike on your account.

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Your first reaction will likely be anger, especially if you're one of the "good" customers who pays your bill on time and who has not gone over your limit. It doesn't matter. Standard credit card agreements allow issuers to change terms "at any time, for any reason."

Get over the anger and plan your response.

Most major card issuers -- American Express is the exception -- offer consumers the option to opt out of the changes. Current federal rules require issuers to give account holders at least 15 days of advance notice of changes. However, new rules that take effect July 1, 2010, require 45 days' advance notice of changes. Some issuers have already adopted the longer, 45-day advance notice. In theory, this time allows consumers the opportunity to shop around for better deals and explore their options before the higher interest rates kick in.

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Note: Doing nothing -- an option often taken by those who choose to put their heads in the sand -- will result in a de facto interest rate increase.

What to do next? Read more....