Credit Card Issuers Raise Interest Rates Again
Well, they’re at it again. Banks and credit card issuers once again raised interest rates on their cards. This comes despite the Federal Reserve’s announcement that they will be leaving interest rates unchanged.
Traditionally credit cards companies would follow suit with the Fed whenever they raise or lower interest rates. I think we can all agree that these are however, anything but normal times due to the poor economy and the financial services sector melting down.
Most analysts agree that this move to raise the APR on people that carry balances from month-to-month is part of a continuing trend that we’ve been saying for months now. An upward trend that is.
There is little mystery as to what the credit card issuers are doing. They have slowly but surely been raising the annual percentage rate on their credit cards for two reasons.
The first is that they are getting absolutely killed on losses from defaults and delinquencies. And the second is that they want to get ahead of the new credit card reform laws that will restrict their ability to raise rates when they go into effect next February.
So in essence the people that play by the rules and pay on time have to now pay for the irresponsible ones that do not. It’s a sad but all too familiar scenario.
Granted there are situations that arise that adversely effect people financially such as catastrophic medical costs and sudden job loss. But the real albatross around the credit market is the record number of charge-offs. A charge-off occurs when the credit card company gives up on trying to collect on debts owed to them.
The Fed stated that they will likely maintain interest rates at exceptionally low levels for an extended period of time because of the fragile nature of the economy. There have been some positive signs recently but we are by no means out of the woods yet.
Even the Federal Reserve acknowledged that consumers are having a difficult time obtaining credit. And the interest rates they are being charged for the credit that they are getting is not in line with the prime rate.
The Fed stated that consumer spending is tepid at best due to the high unemployment rate, lack of growth in income and poor housing market.
Even though it’s been a long and hard climb just to see daylight from the current recession, it looks as if we still have a long, long way to go before we can finally put this nightmare behind us.
Related Information:
- Issuers Raising Rates Ahead of Consumer Protections Find out how credit card issuers are rushing to raise credit card interest rates prior to reforms kicking in....
- Bank of America Will Not Raise Rates Ahead of Reforms Bank of America has agreed not to raise interest rates ahead of credit card reform....
- Don’t Give Credit Card Companies a Reason To Raise Your Rates Keep these things in mind so that your credit card issuer will not raise your interest rates because of them....
- How To Find The Best Credit Cards Interest Rates We show you how to find the best credit interest rates available on the market today. Compare the best low interest rate offers and save....