It used to be that depending on the contract you had with your credit card company, they could increase the interest rate they charge you without notifying you. However, due to credit card law reforms passed in 2009, regardless of what it says in your contract, credit card companies are required to inform you of a pending interest rate increase, and to allow you a reasonable amount of time to close your account before the increase takes effect.
Note that this does not apply if the reason your rate is increasing is because you are delinquent in your payments or have otherwise violated your agreement with your credit card company.
Unfortunately most consumers aren’t even aware when they receive notification, because credit card companies are savvy enough to choose whichever method of notification they’ve determined is least efficient in actually notifying. Most often it’s included in those inserts in your bill with all the fine print that, as they know, almost no one reads. So if you really want to stay on top of such matters, you need to get into the habit of reviewing that material more closely.
If you do choose to opt out, you need merely to inform the credit card company. While you can do this by phone, this isn’t recommended, as you have no proof that you actually informed them. If you are going to do it by phone, at the very least make sure you receive written confirmation from them by e-mail or regular mail, and if you don’t, then follow up before the grace period expires and the changes go into effect.
Better is to submit your notice in writing that you are opting out, and keep a copy. To be extra sure, send it certified mail with return receipt requested.
Much like when a credit card company informs you they are adding an annual fee to your card, you may be able to avoid paying the extra money without closing your account. If you contact your credit card company to tell them you want to opt out, they may well negotiate with you and offer to let you out of the increase without closing your account, if they want to keep you as a customer.
If you do end up closing your account rather than accepting an interest rate increase, of course you still have to pay any outstanding balance. Be sure to keep up with at least the monthly minimums, for again, the kind of rate increase that’s triggered by your missing payments is not the kind you can opt out of.
Also, closing a credit card account can have an impact on your credit score that is kept by the credit bureaus, in that it reduces the amount of your available credit and it increases the percentage of your debt utilization. So you’ll want to take that into account in your decision.
Sometimes the best thing to do is to accept the increase and keep the account, but to rarely if ever use that particular card and make sure you always pay the balance in full each month, so the interest rate doesn’t even come into play.