When you open a credit card account, you’ll see a lot of tiny fine print, spelling out the terms and conditions of your agreement. Those are the rules you agree to follow to keep your account in good standing.
But can your credit card issuer change those terms?
How your credit card company can change your terms
Regardless of the terms when you signed up for your account, your credit card issuer can always change them. You’ll find that arrangement in the fine print, allowing them to change certain terms as they see fit.
However, when they're making significant changes, most issuers are required to give you a 45-day notice. And fortunately, they can only change certain terms on your credit card.
What terms can be changed?
Some terms that can be changed without a 45-day notice. These are less significant changes, like shifts to your allotted cash back or points or a brand change on the card (such as moving from Discover to Visa). Since these don't disrupt your payment amount or process, they aren't considered significant.
But significant changes that require a 45-day notice include changes to your minimum payment amount, certain interest rates and fees, changes to the grace period for late payments, and the way your interest is calculated.
In certain circumstances, these changes can lead to increases to your bills, so most issuers are required to provide the 45-day advance notice.
What can't be changed?
Some terms can’t be changed once you’ve signed up. For example, your card issuer usually can't make a change to the interest rate on your existing balances. However, they can raise the rate charged on new transactions as long as they give you that 45-day notice.
When can your interest rate increase?
Not everything is up for grabs, and not every detail is set stone. For example, the interest rate on your existing balance can only be raised in these situations:
- When a temporary rate expires, like an introductory 0% interest period. For the record, temporary rates like these are required to last at least six months.
- If you have a variable rate and the index your rate is tied to increases.
- If you haven't made your minimum payment in 60 days. However, your credit card company is required to give you a 45-day notice in these cases.
- If your interest rate is connected to a workout arrangement and you either complete the arrangement or fail to meet the requirements, bringing an end to the agreed-upon rate.
- If your rate is determined by the Servicemembers Civil Relief Act (SCRA), but that rate no longer applies to your account.
These exceptions are important. The fine print might be tiny, but take the time to read it. Review the conditions on your interest rate when you open an account.
What about credit limit changes?
Credit card companies are typically allowed to change your credit line on your account without giving you prior notice. This means they can give you more credit, but they can also decrease your credit limit, all without a heads up for you.
If your credit card company lowers your limit to where you have maxed out the credit line, you won’t be able to make any new charges until you pay the balance below the new limit.
But they also aren't allowed to charge any fees for exceeding your credit limit until 45 days after the change. This gives you some time to pay down your balance and avoid penalties.
Credit limit changes are typically based on a mixture of your payment history and your annual income. This is why it's important to stay in good standing with your credit card company and to keep your income disclosure up to date with the card issuer.
Most experts recommend not using the last 30% of your credit line so that you are protected in case of a credit limit decrease.
Can you stop any of these changes?
You can opt out of many of the changes that credit card companies are allowed to do. It's important to note, though, that if you opt out, your card issuer also has the right to close your account.
If your account gets closed, you are still required to pay the remaining balance. You don't have to pay off the whole amount at one time, but some card companies increase your minimum payment when they close your account.
Before you opt out, make sure you know your credit card company's policy. This is spelled out in your agreement’s fine print too.
It's also important to understand that a closed credit card can harm your credit score. A closed account impacts your open account history and lowers your overall available credit, two factors that determine your credit score.
Make a habit of knowing the terms of your credit card, so you can notice changes if and when they occur. Also open every piece of mail from your credit card company, so you can catch any notices before the changes take place.