Why Your Credit-Card Rate Might Not Be Falling

So you may remain as creditworthy a cardholder as ever you were, but some creditors reserve the right to adjust rates because of market conditions -- an ambiguous term that could be interpreted to mean rates can go up if, say, a credit crunch or market downturn leads to increased write-offs.

Want to object to a rate hike?

If you go the legal route you'll face an uphill battle. The near ubiquitous arbitration clause means that you've likely signed away your right to a day in court. Instead, your case will likely be heard by someone hired by a private group chosen by the bank. And many don't allow class action suits -- so if you're being nickel and dimed, you'll have a hard time joining forces to get your money back, and legal fees may be more expensive than excess fees.

But you're not entirely helpless.

The first step is to know your rate. After the prime rate falls, double check your credit card company's math: Your monthly statement should state your premium, and the prime rate is published in The Wall Street Journal. Simply add your premium to the prime rate.

If the prime rate falls and yours didn't, contact your creditor to find out why. You may be able to negotiate a better rate.

Another option is close your account if your rate shoots up and your creditor is not willing to bargain. Often, if you object, the only option is to pay off the bill and close the account. For many consumers, this isn't much of an option: You might not have the funds lying about to pay off the credit card and getting a credit card with a better rate may be a challenge for borrowers with less-than-perfect credit.

The only completely safe way is to avoid getting over your head in credit card debt.

After all, points out Arnold of CardRatings.com: "The credit card industry is pretty unique because they literally hold all the cards."

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A comparison of credit card offers is available on BankingMyWay.com.