5 Steps to Prevent Your Credit Card Company from Increasing Your APR

Your credit card company will try increasing your APR if they can gain more profit without losing you as a customer. This means they will have to believe another company will not offer you a lower APR. Other companies will have lower offers only if your credit and borrowing habits show responsible use of the card. By using the card responsibly, then, you can keep your APR low and, if your company tries to change it, present you with other acceptable alternatives.

Step #1: Use Your Card

You cannot keep a low rate simply by not using your credit card. Building your credit requires responsible use of the card, and this means spending money on the credit card each month. Many borrowers choose to make all purchases on the credit card. This is particularly beneficial if you get good bonus offers through your company, such as airline miles or rewards points to spend toward future purchases.

Step #2: Make Monthly Payments

You will need to at least make monthly payments to avoid any negative repercussions. These payments tend to be very small, and most companies will only require the interest be paid on any credit card month-to-month. However, if you only make your interest payments each month, your balances will start increasing very fast, and you may end up with higher bills than you can afford.

Step #3: Keep Balances Down

To avoid taking on too much debt, pay your balances down each month. It is best to pay the bill the day you make a purchase on the card if you have funds in your bank account. Some expensive purchases, such as repairs to your vehicle, may require you to wait a few months to pay down a balance in full. In this case, make a schedule to ensure the balance is paid off promptly. It is best to always keep your balance below 10% of your total credit limit in order to avoid APR increases.

Step #4: Manage Limits

It is best to have high enough limits that your balance can stay below 10%. For example, if you know you carry an average balance of $700, then you should aim for limits of at least $7,000. Having balances that are too high can lead to a reverse problem, and your credit score can actually drop. This is particularly true if you have too many credit cards open, and your total limits are too high when compared to your income.

Step #5: Ask about APR Increases

If your credit card company does try to increase your APR, you should make sure to ask why. Borrowers who simply neglect to pay attention to their APR will be subject to more increases. As soon as your credit card company knows you are prepared to take your business elsewhere if your rate gets higher, they will fight to keep your business by keeping your rate low. Of course, this is only true if you are a good borrower and have followed the other steps. If not, the company may be happy to see you go.