Arizona credit cardholders might be interested in learning more about why credit card interest rates sometimes increase. In some cases, it is because a promotional APR has expired, so the cardholder is being charged the normal rate. Another reason is because the cardholder has missed two or more payments and is being charged a penalty rate. Those who are charged a penalty rate may have their rate reduced if they make on-time payments for six months or more.

It is possible that a borrower’s credit score has dropped significantly, which may make them a higher credit risk. Finally, it is possible that the card comes with a variable rate, and the interest rate on the card goes up when the prime rate goes up. In the event that the interest rate on a card does go up, the cardholder has several options to remedy the situation.

First, the cardholder may wish to pay off any balance owed and close the card. If the balance is too large to pay off right away, it could be possible to transfer that balance to a credit card with 0 percent interest. Those who are able to pay off the balance may simply want to use the card differently. By paying the balance in full each month, the cardholder will not owe any interest.

A large amount of credit card debt may make it necessary to consider filing for bankruptcy. Some of the benefits of filing for bankruptcy include fast discharge times for Chapter 7 cases as well as an automatic stay from creditor actions like foreclosure. It might also be possible to keep certain types of property, such as a house, car or other valuables. Those who are thinking about bankruptcy may wish to discuss this option with an attorney.

Source: NerdWallet, “If Your Credit Card Interest Rate Takes a Hike, Take Stock,” Claire Davidson, March 16, 2015