Credit Card Rates Continue to Hit Record Highs
What goes up must come down: we learned that in science class. Too bad that same logic doesn`t apply to credit card interest rates. Annual Percentage Rates continue to climb high. According to data from Credit-Land.com, a leading credit card research website, the average APR is now 14.94%.
That rate percentage is the highest since 2007, when the company began tracking the data.
While the rates remain at an all time high, they have been stable for the majority of this year. In fact, the national average has only gone up from 14.71% to 14.94% since the begging of this year. A reason for this could be that credit card issuers are no longer trying to maneuver to adhere to the Credit CARD Act of 2009, which required lenders to restructure the whole way that they presented credit cards to borrowers and the fees that they could charge borrowers.
“These high rates are more than likely the sign of our troubled American economy,” said Arnold Taubman, chief economist at Credit-Land.com. “Our economy combined with the CARD Act has forced the borrower and the lender to get used to new lending policies, fees and procedures.”
The credit card industry claims that the regulations brought about by the CARD Act have forced banks to transfer excess fees along to the consumer. The new rule makes it clear that credit card issuers can no longer jack up interest rates on cards with existing balances within the first year the account is opened. Also, a 45 day notice must be given to consumers who have been subject to new rate increases.
The report goes on to further explain that increasing interest rates is more than likely the credit card lenders attempt to stay afloat in our teetering economy.“
We don`t expect to see the rates decrease, rather we expect them to keep creeping upwards, regardless of our current economic state,” Taubman said. “The CARD Act is still in its newest phase and the banks are still susceptible to substantial monetary losses.”
Another reason for rate increase could be attributed to the credit card issuers. It seems that credit card companies these days are being more selective with their interest rates. Cardholder with lower credit scores are most often than not subject to really high interest rates, and those with better credit scores get the lower interest rates.