Fight higher interest rates

Pen on credit card papers

Don't be surprised if you get a letter from your credit card company with something like "Important Amendment to Your Credit Card Agreement" on the envelope.

That's how hundreds of thousands of credit card holders have learned their interest rates are going up.

Bank of America, for example, has raised rates from as low as 7.99% to as high as 24.99%. Most cardholders who received these notices had never been late with a payment or done anything to hurt their credit history or score.

The letter will provide the first option to avoid the higher rate: Send back a letter opting out of the increase.

That will allow you to pay off any balance at the existing rate but with a huge caveat: You can never use the card to buy anything again.

If you make even one new purchase, then you've accepted the increased rate. That includes any automatic billings that are made to your card, such as subscription renewals or monthly health club dues.

"If you use the card after you send an opt-out letter to the creditor, it will void the opt-out agreement and the increased rates will be applied," says Bruce McClary of ClearPoint Financial Solutions.

There's a better way to challenge a rate increase, according to Liz Pulliam Weston, the author of Easy Money and a columnist at MSN.com.

"If the borrower has FICO credit scores of, say, 700 or above, she might call the issuer and point out that she can get a lot better rate elsewhere and that she'll transfer her balance if the bank won't back off the rate change," Weston says.

Be prepared to make good on that threat if your bank refuses.

Transferring your balance to a new credit card that charges 0% interest for a year may be the best option of all.

Every dollar you pay reduces the balance, making this the surest, quickest route to wiping out your credit card debt once and for all.

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