Credit Card Rates Jump Again and Likely Could Continue

During the past week credit card rates have increased ¼ of a percentage point on variable interest rate cards. That brings the average to 11.7%. But that isn’t the worst of it.

Business Week has reported the latest increase, but the rates have been going up significantly enough to make Congress and consumers concerned. This last week saw the largest increase in rates since February. Back in February Capital One began to make consumers particularly angry, increasing rates dramatically. Interest rates on those with good credit went up for some from 4.9% to 13.9. This is even for people who pay their bills on time or even pay the balance. Banks say it is a business decision because of the economy, but people are outraged when this happens. People have also found that banks can raise rates for no reason. After June 2010 they won’t be able to do this under new set by the Federal Reserve, which is why they are doing it now, financial experts say. Bank of America is one of many, like Capital One, that has raised its rates. For some it has been 14.99% from 5.5% for one customer. A call was made to the credit card company, and some adjustment was made. This is what advisers are saying consumers should do, to call the credit card company and make some agreement. In order to combat these arbitrary increases the House passed a bill last week. The bill restricts credit card practices from sudden increases in interest rates and late fees, passing by a bipartisan vote of 357 – 70. This was after Barack Obama and his administration lobbied the House for passage of the bill. The bill would also prevent credit card companies from giving credit cards to those under the age of 18. These provisions, however, won’t take place for a year, except one that requires companies to give 45 days notice before raising rates. But that won’t take effect for 90 days. It is likely, given past history of these issues, that credit card companies and banks might take advantage of the time lag and continue to raise rates, as has been seen just during the past week. In the meantime consumers, it appears, will have to make their own agreements with credit card companies, as recommended by experts in order to avoid high rates. According to related news, similar issues have gone on in Canada and the United Kingdom.