How the CARD Act Limits When Your Card Issuer Can Raise Your Interest Rate

If your credit card issuer just raised your rate, the first question is whether it was even allowed to. Federal rules limit when a card company can increase your interest rate on an existing account, but there's a major exception for cardholders who fall far enough behind on payments. This explainer walks through those limits and uses a worked example of a cardholder who is 61 days late to show exactly which balances get the higher rate and which don't.

The general rule: no surprise rate hikes on existing purchases

Under normal circumstances, a credit card company cannot raise your interest rate on new transactions during the first year you have the account. After that first year passes, the issuer can raise your rate going forward, but only after giving you 45 days' advance notice. Even then, the new higher rate only applies to purchases you make more than 14 days after that notice goes out — anything you charged before that point keeps the old rate. In other words, under the ordinary rules, an issuer cannot reach back and raise the rate on a balance you already carry; it can only apply the new rate to new transactions going forward.

The delinquency exception: when the rules change

There's a separate, narrower rule that lets an issuer reach back to your existing balance, but only if you fall behind by a specific amount of time. Regulation Z's official interpretations tie this to your payment due date, not the calendar month, and the clock is measured in days, not billing cycles. The CFPB's own example makes this concrete: if a payment is due March 15, the 60th day after that due date is May 14. If the issuer receives at least the required minimum payment by that 60th day, the delinquency exception does not apply at all — even if the payment technically arrives late relative to the original due date. But if the payment received by day 60 is short of the required minimum, the exception kicks in starting the very next day, meaning the issuer can then raise the rate on the existing balance, not just new charges.

Worked example: a cardholder who pays 61 days late

Picture a cardholder whose minimum payment was due on March 15, and whose account is measured under the 60-day delinquency count that runs from that due date. Day 60 after that due date falls on May 14, and day 61 falls on May 15. If this cardholder sends nothing, or sends less than the required minimum, all the way through May 15 — 61 days after the due date — the delinquency exception applies starting that day. Had this same cardholder instead sent a payment equal to the required minimum by May 14, day 60, the exception would not have applied, since the CFPB's own commentary treats a full minimum payment received by day 60 as keeping the account from being more than 60 days delinquent.

• due date day: 0
• 61: 61
• Formula: due date day + 61
• Result: 61

Counting forward from a March 15 due date to day 61, the point at which the delinquency exception applies to the existing balance.

Existing balances versus new purchases: what actually gets the higher rate

Situation	Can the issuer raise the rate?	Which balances are affected?
Ordinary rate change after year one, with 45 days' notice	Yes, prospectively	Only new purchases made more than 14 days after notice — not the existing balance
Payment received on or before day 60 after due date, at least the required minimum	No increase under the delinquency exception	Not applicable; the exception does not apply at all
Payment missing or short of the required minimum past day 60 after due date	Yes, beginning the next day	The existing balance can be repriced, not just new charges

Existing balances versus new charges under each rule path.

Getting your old rate back: the six-payment path

Regulation Z requires the issuer to restore the rate that applied before the increase, but only for the transactions that occurred before or within 14 days after the rate-increase notice, and only after the cardholder makes six consecutive on-time minimum payments. Those six payments have to be consecutive and each one has to arrive on or before its due date, starting with the first payment due after the increase takes effect. For the cardholder in the example above, that means getting back to the original rate on the pre-increase balance requires six consecutive on-time minimum payments, counted starting with the first payment due after the increase actually takes effect.

Key takeaways

• The 60-day delinquency clock runs from your payment due date, and paying at least the required minimum by day 60 avoids the exception entirely.
• A shortfall or non-payment that lasts past day 60 — for example, being 61 days late — triggers the delinquency exception starting that day.
• Six consecutive on-time minimum payments, starting with the first payment due after the rate increase's effective date, can restore the original rate for transactions that occurred before or within 14 days after the increase notice.

1. Check your statement for the exact payment due date, since the 60-day delinquency count runs from that date, not the calendar month.
2. If you're behind, pay at least the full required minimum payment on or before day 60 after the due date to avoid triggering the delinquency rate-increase exception.
3. If your rate is raised under the delinquency exception, mark your calendar for six consecutive due dates and pay at least the minimum on or before each one; doing so makes you eligible to have the old rate restored, but only for transactions that occurred prior to or within 14 days after the rate-increase notice, not necessarily your whole balance.
4. If you receive a 45-day rate-increase notice unrelated to delinquency, note the date; only purchases made more than 14 days after that notice will carry the new rate.

Frequently asked questions

What exactly counts as being 60 days delinquent?

It's measured from your payment due date. If the issuer receives at least your required minimum payment by the 60th day after that due date, you are not considered more than 60 days delinquent for this purpose, even if the payment was technically late.

If I pay 61 days late, does the issuer have to raise my rate?

Once a payment shortfall lasts past day 60 after the due date, the delinquency exception applies, meaning the issuer is allowed to raise the rate on the existing balance.

How do I get my old interest rate back after a delinquency-based increase?

You need to make six consecutive minimum payments on or before each due date, starting with the first payment due after the increase takes effect; doing so restores the pre-increase rate on the balances that existed before or within 14 days after the increase notice.

Sources

• www.law.cornell.edu
• www.consumerfinance.gov
• www.consumerfinance.gov