Your options if your issuer changes your agreement

You open your mail to find your credit card issuer increased your interest rate, lowered your limit or added an annual free to your card. If you feel like you got the raw end of the deal with an update to your card's agreement, what can you do?

"The consumer always has options," says Andre Bolduc, an Ottawa-based expert and senior vice president at BDO Canada. "It's a matter of talking to your credit card issuer and asking."

"The basic and most fundamental terms and agreements -- like grace periods or missing a payment -- won't change, but as far as annual fees or interest rates, that's all very negotiable," says Richard Moxley, author of The Nine Rules of Credit and spokesperson for eCredit Fix. "It's fairly simple to get them to reverse some changes."new-terms-conditions

Card issuers are at liberty to modify your card agreement at any time, but Bolduc and Moxley have some advice on how to handle a change you think is unfair.

Ask your issuer to reverse the change
Your best-case scenario is to convince your creditor to reverse the changes. Start by making sure your account is in good standing. A responsible credit card client is more likely to be successful than one who's constantly missing payments or carrying a hefty balance.

Then, pitch your case. "Call your credit card issuer and explain your situation and ask for your original terms," Buldoc says.

Moxley says waiving annual fees is an easy feat, while securing your lower interest rate will depend on the card, how long you've had it and how you handled the account.

Find a compromise
If your creditor isn't budging, your next move is to try to meet on middle ground. Give a reason for your negotiation. For example, Bolduc says, explain that a higher interest rate could lead to trouble in making ends meet. 

"Some [creditors] may work with you but others won't be as flexible," he says. "If you are in trouble, you're deemed at higher risk, but you're in financial difficulty so you have no choice but to ask." Most banks will give you some leniency with a lower interest rate. It likely won't be permanent, but it should be at least a few months.

Try asking a simple, "What can you do for me?" to get the conversation started. If you feel like you aren't making any gains, hang up and call again to get a different representative, or ask to be forwarded to a manager or the retentions team. Reiterate your thoughts to these departments and let them know that some kind of common ground is important to you, Moxley says.

You can close your account -- but only if it makes sense
Your instincts may tell you to close the card outright -- you've been a longtime customer and your loyalty should be valuable to your creditor. That's harmful thinking, Moxley says.

"The biggest thing people need to do is look at it logically and not emotionally," he says. "You won't hurt bankers by closing your account, but you might do damage to yourself."

Before closing your account, you need to make sure you have other cards with a longstanding history to support a good credit score moving forward.

Closing your card could even affect your chances at qualifying for a loan, so if you're going to apply for a mortgage, open a line of credit or negotiate some type of financing in the near future, you likely want to keep your card active. Moxley says he's seen clients close their credit card accounts and get denied on their mortgage applications months later.

"You need to look at it and consider if it's worth the hit to your credit card or are you better off paying the [new fees]," he says.

If you decide to close your card, clear your balance first.

Remember, your creditor has to provide you with details of changes in writing at least 30 days before the changes go into effect, according to the Financial Consumer Agency of Canada. This gives you a few weeks to plan out how to talk to your creditor and how to move forward if you don't get what you want.

See related: 3 common ways your credit card agreement can change, Why issuers close credit card accounts

Published March 30, 2016

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