If you violate your credit card’s terms and conditions — by making late payments — your issuer could trigger a penalty or default rate. This is a very high interest rate, typically close to 30 percent.
How long will it last? Your agreement will explain the conditions in which the company may apply the penalty rate and how long it will take for the issuer to restore your original APR.
Not only are interest rates increasing, but so are penalty rates.
If you face having to pay a penalty rate, do your best to make on-time monthly payments for the next six months so that you can return to your regular rate. Don’t fall into the trap of thinking that you’ll forever have to pay that high interest. After 6 months, tell them to lower your rate gain. If they don’t want to, let them know that you understand your rights.