Reply #66: Credit cards quitting rate-bumping game (good news) [View All]

[ozymandius]

Credit card issuers are pulling back from the controversial practice of raising customers' interest rates because of missteps with other creditors.

Under so-called universal default policies, issuers can raise an interest rate if a card holder pays a mortgage or utility bill late, their credit score drops or they inquire about a car loan. Nearly 45% of credit card issuers had universal-default policies earlier this year, up from 39% two years ago, says advocacy group Consumer Action.

Some issuers are changing their policies. Citibank now lets customers opt out of the rate increase and use the card on its old terms until the expiration date. Chase no longer raises rates if card holders pay late on another bill but could still do so if credit scores drop.

Discover has removed the language from its card holder agreements, and American Express, after testing the policy on a small group of consumers last year, decided not to move forward.

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