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Have you been 'rate-jacked'? Here's a sample opt-out letter

New credit card law lets consumers decline interest rate hikes

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Has your credit card issuer notified you of an interest rate hike, increase in fees or other significant changes to your credit card account?

CREDIT CARD REFORM, PHASE 1, KICKS IN

The first provisions of the most sweeping credit card reform law in decades go into effect today, giving consumers new rights in dealing with their card issuers. Learn more about the law, and how it will affect you:

  • Consumer Q&A: What you need to know about the new changes
  • Credit card video: Credit CARD Act to bring big changes
  • Comprehensive guide to the Credit CARD Act
  • Credit card reform legislation time line
  • Will new credit card law hurt or help?
  • Sample opt-out letter
  • How to file a complaint against a credit card company
  • Credit CARD Act home page
  • Exercising opt-out option
    The Credit CARD Act of 2009 requires that banks and other credit card issuers give consumers at least 45 days' warning of such changes and inform consumers of their rights to opt out and close their accounts. The 45-day advance notice period allows consumers to shop around for ways to pay off the balance, including personal loans or balance transfers to other credit cards. However, switching credit cards may not be that easy for some, especially if they have bad credit.

    Opting out of a rate increase means cardholders will not be able to make additional charges on the card. Doing so will trigger an automatic increase to the new, higher APR. Card users who choose to opt out should be sure to cancel any automatic payments made with the card (such as game or movie rental services, utilities or other recurring monthly bills).

    Under the Credit CARD Act, credit card issuers must offer consumers three options for repaying the remaining balance on accounts closed through the opt-out right:

    • Paying off the balance over at least five years.
    • Making minimum monthly payments that are no more than twice the percentage charged before the change in terms.
    • Using the same repayment terms on the account at the time consumer decided to opt out.

    Note: Cardholders cannot opt out of all changes in terms. Increases in the minimum payment amount required each month, decreases in credit limits and APR increases triggered when card users default on payments are not eligible for the opt-out option. In addition, card users also cannot opt out of increases in interest rates caused by changes in the prime rate on variable rate accounts. 

    SAMPLE OPT-OUT LETTER
    FOR INTEREST RATE HIKES

    Your address
    City, state, ZIP code
    Today's date

    Name of credit card issuer
    Address
    City, state, ZIP code
    Re: Account number (place your credit card account number here)

    To whom it may concern:
    I have received your notice of change in terms on the above credit card account. The notice gives me until (DATE) to notify (name of credit card issuer) of my intention to opt out or reject the increase in my interest rate.

    I am rejecting this change in terms and wish to continue to pay the balance of my account under the old terms. I understand that I can no longer use this account. If I use it, the new higher APR will apply to the account.

    Please notify me in writing of receipt of this written request to opt out of the interest rate hikes.

    Sincerely,
    (Your name as it appears on your account)

    (Download the opt-out sample in pdf or text format)

    Although the law allows consumers to use a toll-free number provided by the issuer to call or to write in their intentions to opt out, credit counselors recommend card users put their interest rate rejections in writing.

    Frequently asked questions about opting out of credit card interest rate increases


    Where should I mail the letter?

    Be sure to mail the letter to the correct address. The change in terms notification will include an address to send written notice of your intentions to reject the interest hike. This address is typically NOT the same address that you send your monthly payment. Do NOT place this letter in your payment envelope and send it with your bill. Use a separate envelope.

    Here are the customer service mailing addresses for the top credit card issuers.

    NOTE: These addresses are current as of Aug. 20, 2009. If you have more up-to-date information, please contact us at: Editors@CreditCards.com.

    American Express: P.O. Box 981540, El Paso, TX 79998-1540.
    Bank of America: FIA Card Services, N.A., P.O. Box 15565, Wilmington, DE 19850.
    Capital One: Attn: General Correspondence, P. O. Box 30285, Salt Lake City, UT 84130-0285.
    Chase: Chase Card Services, P. O. Box 15298, Wilmington, DE 19850-5298.
    Citi: Customer Service Center, P.O. Box 6218, Sioux Falls, SD 57117-6218.
    Discover: Discover Financial Services, P.O. Box 30943, Salt Lake City, UT 84130-0943.
    HSBC: HSBC Bank USA, N.A., P.O. Box 2013, Buffalo, NY 14240.
    Wells Fargo: Wells Fargo Card Services: P.O. Box 10347, Des Moines, IA 50306-0347.

    Why not call in my request to opt out rather than go to the trouble of writing and mailing a letter?
    Credit card issuers give customers the option of calling a toll-free number to reject interest rate changes or submitting a written request.

    Consumer advocates recommend cardholders make the opt-out request in writing so they have proof and a paper trail of the request. Credit card issuers may promise to send written acknowledgement of the telephone request, however, there are no guarantees.

    According to Linda Sherry, national priorities director for Consumer Action, a San Francisco-based consumer advocacy group: "We have heard from some consumers who said they never got the letter they were promised 'outlining' the terms of the opt-out they had elected."

    How should I send the letter?
    To ensure that you have proof of sending the letter, send via certified mail with a return receipt requested.

    What is the deadline for rejecting the increase?
    Again, check the notice of change in terms that you received from the issuer. The Credit CARD Act requires the company to notify consumers of the date on which the changes will take effect and the deadline for opting out of changes. 

    To be safe, don't wait until the last minute. Send the letter as soon as possible as there may be delays from the U.S. Postal Service. Set a reminder to yourself on your cell phone or calendar to send the letter no less than five business days before the deadline.

    See related: How to react to a rate jack attack, Credit card users beware: Terms, they are a-changing

    Updated: August 20, 2009


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