We still have some debt from the business that failed in the last recession (remember the dot-com bubble burst?) and what remains has been spread across three credit cards. The debt on these credit cards averages between 4% and 6% and has been that way for the last few years. This month we received notices from all three credit cards that "due to the economic conditions we are raising rates." One card to 10%, one to 15%, and one to 20%.
Here's the tip for those of you that are in the same situation: You can choose to refuse the new "conditions" of the card, including the increase in APR, by closing the account. The verbiage in the contract makes it sound as if you will owe the full amount when the account is closed but in fact that is not the case. When you close a credit card account with a balance remaining you will continue to receive the same monthly bills and make the same payments at the original APR until the card is payed off - the only difference is that you won't be able to use the card any further for charges. So check you contract closely, call the bank, or write the notification letter as required in order to close the account. There is always a time limit so be sure to act quickly when you receive the new terms from the card company.
Your credit will take a small ding after closing accounts as your "available credit" will drop significantly. We have "excellent" credit and the rates are still being pushed up so I'm not sure what the point is of keeping credit ratings spic and span right now. For us, paying off debt is definitely more important than a small drop in credit ratings.
Hope the tip helps for anyone that is facing the same situation.
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