Credit card rates are raised according to rules and formulas.

When they are raised to penalize a cardholder for a violation of contract terms (by applying a penalty rate to the account) that change in rates is called repricing.

HOW TO AVOID REPRICING

Repricing occurs as a result of late payments. So make sure your payments are on time, and that you pay at least the minimum amount due.

If you miss a payment outright or pay less than the minimum amount due, you are taking the risk that your account will be repriced, despite new legislation that is slated to take effect next year.

Repricing hasn’t gone away, nor is it likely to go away.

Being late with a payment will still have consequences and repeated violations will almost surely result in an account being repriced, although the formula is likely to be a bit different from what it is today.

CREDIT CARD INDUSTRY REPRICING RULES

So, like that old laxative commercial that warned against guessing in regard to how many prunes to eat, (”Are six too many? Are two enough?”) you may be wondering how many days and/or how many times you must be late before your account is repriced to an astronomical default rate.

While there is more than one rule, the most common one used for repricing accounts is referred to as 3-2-12.

THE 3-2-12 RULE

These 3 numbers sum up how millions of credit card holders have been repriced. It has been the most common repricing rule applied across the board in the credit card industry and goes like this:

Your “regular” rates default to your penalty rates if you are 3 or more days late with your payment twice within 12 consecutive billing cycles.

It might be easier, however, to remember it  as 1-2-3.

If in one year you are late with a payment two times, and if you are three days (72 hours) or more late in each of those two instances, your account is automatically repriced.

This, however, is not the only repricing rule.

If you’re on an introductory or “teaser” rate, you can be repriced to your “regular” or default rate if you are one minute late just once.

FIND OUT YOUR REPRICING RATES

So, if you don’t know the current repricing rule for your credit card accounts, call and find out which rule applies to each one.

You need to know if you being one minute with a payment will revert your account from a 2% rate to a 22% rate.

Also, most people do not know that incorrectly applying these rules is a common area of credit card system error.

Computer systems, it seems, have as much trouble keeping track of repricing rules as customers do.

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