A Credit Holder is a person who has an interest in purchasing credit cards, as they benefit from the interest rate. Generally, credit holders enjoy high interest rates on loans and mortgages. Credit card interest rates are subject to change, depending on credit card issuers' policies, and the economy in which the issuer operates. For example, credit card interest rates have been at record lows in the last year, but many consumers have not been able to pay their balances off in time. Many people who have had trouble paying off credit card balances, have filed for bankruptcy, or have stopped making payments altogether. All this has had a negative effect on the credit card industry, and issuers are suffering.
One way the credit card companies are trying to recover money is by raising the interest rate, and making it more expensive to borrow money. If the interest rate goes up, the APR will go up, and that means it will cost more to borrow from the credit card issuer. A Credit Holder, therefore, benefits from the low APR, and pays less overall interest in the long run. When the economy improves and the unemployment rate comes down, the credit card APR may go back down, but it may not be as low as it was at the height of the recession. The best thing for you to do if your credit card interest rate suddenly goes up, is call your issuer and ask for a special rate.
There are also other things that affect the credit card interest rate, including the grace period. Grace periods are periods of time in which you do not have to pay any interest, but must pay a certain amount of fees. The longer the grace period, the less interest you will pay. If the grace period is ending, the credit card issuer will most likely raise the APR to offset the lost revenue.
When the grace period is ending, if you are still in debt, you must begin paying off your balance as soon as possible. Otherwise, the grace period will end, and the APR will jump dramatically. The credit card issuer will issue you a new credit card. Then, the account will show a balance due of, or unpaid, and the balance will show an astronomical APR. This is called a negative balance.
The reason that the credit card company charges interest is because they earn a percentage from the outstanding balance. If you owe a hundred dollars on your credit card, then you will only have one payment, and that payment will be the minimum payment. However, if you owe two thousand dollars or more, then your credit card company earns interest from the higher amount.
A credit holder has the right to challenge the interest rate increase, or to request that the penalty be dropped. You should contact your credit card company at least thirty days before your balance increases. You must give written evidence of your financial problems, such as reduced income and inability to pay a minimum payment. You should also provide copies of monthly bills, and proof of employment. If you win the challenge, the credit company must cease the interest increase immediately.
Many people are unaware that once a charge has been placed on your credit report, it remains there for seven years. While you can challenge the account, if you do so during the seven year period, the credit company must prove that your account is yours. In order to do this, they must access the records of your credit transaction. If they cannot verify the account is yours, then the account is removed. However, if they can, then you have the opportunity to challenge the account again.
With many credit cards in circulation, many people have accumulated a large amount of debt. If you are a credit holder with a large balance on one or several cards, then you need to work on your credit report, and ensure that any future credit card transactions are accurate. The less inaccurate information that appears on your report, the better chance you have of getting approved for credit. By keeping a good credit card payment history and making your monthly payments on time, you can improve your credit rating. After a time, if you remain a credit worthy customer, you may be offered an unsecured credit card with a higher credit limit and lower interest rates. If you are in doubt as to whether or not a new card would improve your credit, consider requesting an increase to your current credit limit.