When a credit card changes its rate or terms

Credit card interest rates are high, and they tend not to move with Bank Rate changes: the Bank of England notes that credit card rates stay high even when other borrowing costs fall¹. That means a rise on your card is usually a decision by the provider, not a mechanical follow-on from the economy. Providers do have the power to raise the rate or change other terms of your agreement, but the rules limit when and how. They must give you notice, they must have a valid reason, and in most cases you have the right to reject a rise, close the card and carry on repaying what you owe at the old rate².

The protections around a rate rise are specific and time-limited. You must get at least 30 days' warning before a rise takes effect, and you then have 60 days to reject it². There are also groups of customers the rules shield from rises altogether: a firm must not increase the rate on a credit card where the customer is two or more payments in arrears, has agreed a repayment plan, or is in serious discussions with a debt adviser about a debt management plan, unless what is ending is a promotional rate⁴.

How a credit card rate or terms change works

A credit card agreement gives the provider a right to vary the terms, including the interest rate, and the Financial Conduct Authority's rules govern how that right may be used. The rate charged can also vary based on the types of transaction made on the card, such as purchases, balance transfers and cash withdrawals³. Providers may increase or decrease interest rates and charges, and change other terms, to reflect an actual or reasonably expected change in their underlying costs, in law or regulation, in codes of practice or industry guidance that applies to them, in a ruling of a court, ombudsman or similar body, in an undertaking given to a regulator, or in their way of doing business, including the introduction of new technology⁵.

A valid reason might be a change in the provider's own funding costs, a reassessment of the risk you represent, or a wider repricing of its card book. What the rule rules out is an increase with no reason behind it. The same part of the rulebook adds a further restriction aimed at customers whose finances are under strain: where a customer is at risk of financial difficulties, a firm under a credit card agreement must not increase the rate of interest, other than where a promotional rate of interest ends⁵.

The market study that led to these rules found that rate rises were a real and recurring feature of the UK card market, and that firms were using risk-based repricing, where the rate a customer pays is adjusted according to how the lender assesses them⁷. Providers must explain, before you sign up, that interest rates or charges may be increased and that risk-based increases exist⁸. So a change to your rate is not necessarily a sign you have done anything wrong, but it is a moment to check what the new rate means for your balance and whether rejecting it is the better course.

Notice of variation: at least 30 days' warning

If your credit card company decides to increase your interest rate, it must contact you at least 30 days beforehand to give you notice of the change². This is often called a notice of variation. It should tell you what the new rate is, when it takes effect and what your options are, including the right to reject.

The 30-day rule matters because it creates the window in which you can act. Without notice, a rise could quietly increase the cost of a balance you are paying down over months or years. With it, you have time to work out what the rise means, compare it with what you could get elsewhere, and decide whether to accept it, reject it and close the card, or move the debt.

Notice of a change is not the same as notice of everything. Providers are required to explain upfront that rates and charges may be increased, so the possibility of a rise is part of the deal from the start⁸. What the 30-day notice adds is the specific warning that a particular rise is coming to your account, on a date you can see in writing.

Rejecting a rate increase: 60 days to say no

If a credit card company increases the interest rate on a card, the customer is given 60 days to reject the increase and pay off the balance at the existing interest rate³. Which? describes the same right as 60 days to reject the hike, cancel the card and pay back what is owed at the old rate². Rejecting does not mean finding the money immediately: the balance stays on the account and repayments continue, but at the interest rate that applied before the rise.

The trade-off is that the card is closed. You cannot keep spending on it at the old rate, because the right to reject exists precisely so that a lender cannot make an existing debt more expensive without your agreement. If you want to keep a card for spending, that is a separate decision from what to do with the balance.

The rejection window is not the only protection. If you are at risk of financial difficulties, the firm must not raise the rate at all, other than where a promotional rate ends⁵. And firms must not increase the rate on a credit card where the customer is two or more payments in arrears, has agreed a repayment plan with the firm, or is in serious discussions with a debt adviser with a view to a debt management plan, again excepting the end of a promotional rate⁴. The same principle runs to credit limits: a firm must not increase, or offer to increase, a customer's credit limit where the customer has asked not to receive increases or is at risk of financial difficulties¹⁰.

What an interest rate rise costs you

The scale of card interest is what makes a rise worth taking seriously. The effective rate on interest-bearing credit cards was 21.61% in July 2024, up from 21.28% the previous month⁶. Earlier FCA research put the typical charge for credit card debts as usually as high as 15%¹¹. On a balance you are paying down over years, each percentage point added to the rate is money that does not reduce what you owe.

The FCA has documented what this looks like in practice. One case study, a customer who gave up work to care for her husband, owed more than £10,000 on her credit card; over five months she paid more than £600 towards her balance but accrued more than £1,000 in interest and charges, so her overall debt increased by more than £600¹². Her story shows the mechanism that makes card debt hard to shift: when the interest added each month exceeds the payment made, the balance grows even while you are paying.

Interest is charged on the whole amount, not just what is left unpaid. NI Direct's guidance is blunt:

A rate rise compounds this. More interest is added as the balance gets bigger¹⁴, so a higher rate on a balance that is already growing costs more each month than the same rise on a shrinking one. If you pay off the whole balance by the due date, none of this touches you: no interest is charged on purchases when the total amount is paid off by the due date⁹. A rise only costs money on money you have not yet repaid.

When a promotional rate ends

Many cards start with an introductory rate: you pay a low rate of interest or none at all, and the rate then increases after a certain amount of time¹⁵. The end of a promotional rate is treated differently from a rate rise. The rules that stop firms raising rates for customers in arrears or at risk of financial difficulty do not apply where a promotional rate of interest ends⁴. The 0% period was always temporary, and its expiry is not a variation of the deal.

That makes the small print decisive. National Debtline warns that some agreements say interest will be added as soon as a payment is missed or after the promotional period has ended¹⁶. Missing a payment on a 0% deal can end the offer early, and the balance then moves to the card's standard rate, which is where the figures in the previous section come in.

When a promotional period is coming to an end, the options are the same as after a rate rise: repay the balance, keep it on the card at the new rate, or move it. Many balance transfer deals offer 0% interest on the amount you move⁹, though as the next sections set out, moving a balance has its own costs.

Fees and charges that can change

Interest is not the only term that can move. The FCA's rules require firms to explain, before you take a card, that different rates of interest and different charges apply to different elements of the credit, that interest rates or charges may be increased, that risk-based rate increases exist, and what the conditions and fees on balance transfers are⁸. In practice, you will usually be charged for going over your credit limit, for using the card abroad and for late payments¹⁵. Some cards also charge an annual fee for use of the card, added to the amount due¹⁵.

Late payment charges have a benchmark. Charges of more than £12 for missing a credit card repayment may be seen as unfair³. If you go over your credit limit, the provider may charge you a fee¹⁷. Charges and interest can be added if you go over the limit, which makes it harder to get further credit in future¹⁸.

Two charges you cannot be asked for are worth knowing. You cannot be charged extra simply for using a credit or debit card, though you can still be charged extra if your bank or the seller's bank is outside the European Economic Area, or if you are using a business card³. And it is no longer legal for credit card providers to send out cheques you can use to withdraw money or pay for goods, unless you have asked for them³. One exception sits outside the card industry's own rules: paying HM Revenue and Customs by card can attract a fee, under regulations that increase the range of cards in respect of which a fee is payable¹⁹.

Cash withdrawals already cost more

Cash withdrawals sit outside the interest-free structure of a card. They attract a withdrawal fee, a higher APR, and no interest-free period, and they are recorded on your credit report²⁰. The interest rate for cash advances is usually higher than the rate for purchases, and interest is added to your account straight away, even if you pay off the balance by the due date⁹. StepChange puts it simply: cash transactions will always charge interest, and you are charged interest from the day you took the money out²¹.

The fee is typically around 2% of the amount you withdraw⁹. Abroad, you may be charged a foreign transaction fee on top of the usual cash advance fee, and most credit card companies charge a commission charge when you use the card abroad³. Buying foreign currency on the card counts as a cash advance too, with the same fee, higher APR and loss of the interest-free period even if the bill is repaid in full and on time²⁰.

A rate rise does not change this structure, because cash was never on the standard purchase rate. But it does make cash borrowing dearer still, since the cash rate is a rate, and it moves with the card's pricing. The dedicated guide to withdrawing cash on a credit card covers the detail.

How repayments are applied to your balance

When a card carries different kinds of debt at different rates, the order in which repayments are applied decides what you actually pay off. The rule that protects you here is that the most expensive debt on your credit card will always be paid off first³. So if you have a balance at the purchase rate and a cash advance at the higher cash rate, your repayments reduce the cash debt before the cheaper one.

This matters most when a promotional rate is running. If a 0% balance transfer sits alongside purchases attracting interest, the repayments go to the purchases first, because they are the expensive debt. It is one reason a card can cost more than expected even while a 0% offer is live, and the guide to purchases on a balance transfer card covers it in full.

The minimum repayment is typically around 3% of the balance due or £5, whichever is higher¹⁵. Paying only the minimum stretches the debt over years, and your credit card company should contact you to warn you of what might happen if you only make minimum payments³. The guides to minimum payments and to how interest is charged explain the mechanics.

Switching to another card: balance transfers and fees

Moving the balance to another card is the third option after accepting a rise or rejecting it and closing the account. A balance transfer shifts the debt to a new card, often at 0% interest for a promotional period⁹. The catch is the fee. If you move a balance to another card you are likely to be charged a handling fee of around 2% of the balance⁹, and most credit card providers charge 2% to 3% of the amount you are transferring as a one-off fee¹⁴. Which? puts the typical fee at around 3%²⁰. Some companies charge the fee as a flat amount instead, depending on how much you are transferring¹³.

A money transfer credit card shifts cash into your current account to spend as cash, usually for a fee of around 4%²⁰. Whether a fee is worth paying depends on the interest it avoids: a 3% fee on a balance that would otherwise sit at the typical card rate of 21.61%⁶ for years can be far cheaper, but on a balance you could clear in a month or two it may not be. The comparison of balance transfer fees works through the arithmetic.

Applying for a new card is not free of consequence either. Any failed application reduces your credit rating, what StepChange calls the rejection spiral¹⁸. The guide to applying for a credit card covers eligibility checks that show your chances before you apply.

If you are struggling with repayments

The rules give people in difficulty real protection, and the first step is knowing that a rise you cannot afford is not the end of the options. Firms must not increase the rate where you are at risk of financial difficulties, two or more payments in arrears, on a repayment plan, or in serious discussions with a debt adviser⁴. If a rise has already landed and repayments have become unaffordable, free help is available: StepChange, National Debtline and Citizens Advice all give free debt advice, and there are dedicated guides for credit card debt in Scotland and Northern Ireland.

The persistent debt rules add a further backstop. Among people who do not clear their balance each month, 26% paid more in interest, fees and charges in 2022 than they paid off their cards²². Under the FCA's proposal, customers in persistent debt would be made aware that increasing their current rate of repayment would reduce their cost of borrowing and the time taken to repay, and warned that the card may be suspended and reported to a credit reference agency²³. If a customer is still in persistent debt at 36 months, the provider must contact them again and give them options for increasing payments so that the balance is repaid more quickly²⁴.

If you cannot afford higher repayments, that is a recognised position with its own rights, covered in the guide to forbearance. The wider guide to help with credit card debt sets out the free options, including debt management plans and other solutions.

Complaining about a change to your card

If you believe a rise or a charge is wrong, complain to the provider first. Grounds can include a rise without a valid reason, a rise while you were in arrears or on a repayment plan, a late fee above £12, or not being given the notice or the rejection window the rules require. If the provider does not resolve it, the Financial Ombudsman Service can look at it for free.

Complaints about credit cards are among the most common the ombudsman sees. In 2025/26 credit cards were the third most complained about product, with around 22,800 complaints²⁵. In the first quarter of 2025/26 there were 6,600 new complaints about credit cards, with a 25% uphold rate in the customer's favour²⁶, and in the first quarter of 2026/27 there were 5,783²⁷. Rate rises themselves have a long complaint history: the ombudsman recorded credit card companies making substantial increases, sometimes by as much as ten percentage points, in the rate of interest²⁸.

1. Complain to the provider in writing, setting out what changed, when you were told and why you think it was wrong.
2. Give it eight weeks to respond, or use its final response if it comes sooner.
3. Take the complaint to the Financial Ombudsman Service within six months of that final response.
4. If the ombudsman upholds it, it can order the provider to put things right, including refunding charges or interest.

The guide to complaining about a credit card provider covers the process in detail, and the ombudsman's service is free. Complaining does not stop the debt being owed, so keep making repayments while a complaint runs, and if the underlying problem is affordability, free debt advice addresses that in a way a complaint cannot.