Will Interest Rate Hikes Backfire on the Credit Card Companies
In the wake of new federal laws aimed at reforming the credit card industry many cardholders that carry a balance from month to month are now seeing substantial hikes in the interest rates they are charged.
It has absolutely nothing to do with paying on time or not. Nor does it have anything to do with the Federal Reserve raising the fed funds rate. Traditionally, that has been the catalyst that has prompted interest rate raises on credit cards.
In addition to higher interest rates many credit card account holders are seeing reductions in their credit lines as well. These measures are clearly in response to the growing number of defaults and bankruptcies.
It is an attempt made by the credit card issuers to protect themselves as much as they possibly can. You have to wonder though, the increased interest rates will mean larger monthly bills. How many people will that push over the edge into defaulting on their payments or declaring bankruptcy?
As the old saying goes, the credit card companies may just be “cutting off their nose in spite of their face”. The reduction in credit available is understandable, but jacking up interest rates may just backfire on them.
Let’s say a cardholder is already straining to make their monthly payments as it is. By making those payments more expensive due to higher interest rates that cardholder may just say the hell with it and stop paying altogether.
In our next post we are going to talk about some of the things you can do when you find that the credit card company has raised your interest rates.
Related Information:
- What You Can Do If Your Credit Card Company Raises Your Interest Rate Find out how to approach your credit card company if you suddenly find your interest rates have been raised....
- Credit Card Companies Continue to Hike Interest Rates Credit card companies continue to hike interest rates before credit card reform legislation takes hold....
- What You Can Do If Your Credit Card Company Raised Your Interest Rate We offer some solid advice on what you can do if your credit card issuer raised your interest rates....
- Tips For Getting Your Credit Card Interest Rate Reduced Some helpful tips on how to get your credit card interest rates reduced....