Have you ever defaulted on your credit payment and been penalized for that by your credit card company? In case you answered "yes" to this question you must be almost shivering every time you hear the information about the penalty interest rates, ever-growing credit fees, or the universal default.

These fees are not the only source of profit of the banks and credit companies. Lenders have the right to make the rates higher any time. It is until recently that cardholders had just to close their credit card accounts as the rates eventually turned to be unmanageable.

The Federal Reserve has finally faced that the number of the complaints keeps increasing from the cardholders. And the new regulation was introduced, a so-called Truth-in-Lending Act. This act is aimed at prohibiting the lenders from interest rates increase unless the company issues a 45-days letter to inform the customer. This period of time is provided so as the customers have the time to make the opt-out actions in case they don't feel the situation OK for them. So, what is the cardholder to do in case his credit card's rates increase severely?

First of all, a customer can pay his outstanding balance off at the initial plastic rate; or he/she may move one balance on to another card, a low rate card offer. So to say, just make a balance transfer. It is sad but not every cardholder has got an opportunity to just opt out. There are actually some instances that can make the new rule simply invalid.

As a result, in case you have a low credit score and a bad or not-so-good credit history, defaulting on your credit card will lead to the situation when you still will have to pay the default fee. The penalty rate can pretty high, for up to 30%. What are the instances then when a cardholder has got the right to just opt off? If the rate increase is not due to the payment default, you are to be allowed to pay off the balance at the initial rates. In this case, the opt-out action is allowed. Moreover, if the situation is not connected with the expiration of the so-called grace period that is always characterized by the lowest APR, then you are eligible to opt-out. Another option is that you just find the credit company that is willing to roll over your credit card's balance.

But if these three instances are not present, you can claim the provision that can allow you to pay off your card's outstanding balance at the previous interest rate or there is another option - make a balance transfer within a defined period of time.

Most clients feel themselves kind of unfair treated when they are denied to close their credit card when unsatisfied with the rates. But imagine that all the cardholders would be allowed to opt out in all the cases - everybody would just do that once the grace period was over!

The plastics' interest rate issues are more and more becoming the area of sharp complaints among the cardholders and financial specialists. That's exactly why the Federal Reserve is somehow trying to deal with the unpleasant matter. Will it become more advantageous for the customers? The time will show.

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