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  1. #1 Credit card rates at record highs near 15% 
    Credit card rates at record highs near 15%

    By Blake Ellis, staff reporterJanuary 28, 2011: 5:00 AM ET


    NEW YORK (CNNMoney) -- Interest rates are now hovering near record highs, at an average rate of 14.72%. And if your credit is bad enough, you could even end up with a rate as high as 59.9% APR.

    That's because while the CARD Act helped crack down on certain fees and requires more disclosures, it didn't cap every credit card holder's worst enemy: interest rates.

    Sure, the new rules prevent banks from raising most interest rates retroactively, but there's no limit on the rates they can charge new customers.

    "Rates are going up because card issuers know that once you get a card they can't raise the rates, so they're raising rates on the front end to ensure they get the revenue from that interest," said Beverly Harzog, credit card expert at Credit.com.

    APRs have climbed more than 20% over the past two years and hit an all-time high of an average 14.78% in mid-November, based on weekly data CreditCards.com collects from 100 of the nation's top credit card issuers.

    And there's no end in sight. While interest rate caps have been proposed -- including a proposal earlier this month from New York Congressman Maurice Hinchey that would limit rates at 15% -- none have been passed into law so far.
    The end of credit cards is coming

    So what do record high interest rates mean for you? If you have a terrible credit score, opening a credit card is going to be painful. Though rates vary depending on the card you apply for, with a score below 599 you'll likely be stuck facing an APR of 24% or higher, said Harzog. If you can get a card at all.

    In fact, First Premier Bank offers a Gold MasterCard with a whopping 59.9% rate for those people with "less than perfect credit", according to its website. And that rate is actually down from the 79.9% rate it originally charged.

    Even with a credit score between 600 to 649 -- still considered poor, but not terrible -- you're probably looking at rates around 20%.

    Harzog recommends staying away from interest rates above 20% and instead getting a secured card from a lender like Orchard Bank as a way to build up credit so that you can eventually get a card with a decent rate.
    CNN
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  2. #2  
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    Can't see it from my house. :D
    "Today, [the American voter] chooses his rulers as he buys bootleg whiskey, never knowing precisely what he is getting, only certain that it is not what it pretends to be." - H.L. Mencken
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  3. #3  
    Senior Member Arroyo_Doble's Avatar
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    Sure, the new rules prevent banks from raising most interest rates retroactively, but there's no limit on the rates they can charge new customers.
    I guess they don't want as many of those as they used to get.
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  4. #4  
    Well, I would guess that the banks issuing these cards have done more than a little strategic research and they came up with an answer that was satisfactory to them. When I think about it, people like me are essentially getting a free ride on the backs of the indebted and have been for years.

    If my credit card decided to up interest rates, it wouldn't affect me since I pay off every month. If they decided to charge a fee-for-use that I found unacceptable, I'd just drop the card. Clearly the credit companies aren't courting me or people like me since we don't make them any money.

    While they are continuing to stick it to the financially confused, maybe at least a few of those people will decide to use debit cards or prepaid cards instead of using credit. That will save a few people, anyway.
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    Quote Originally Posted by Gingersnap View Post
    Harzog recommends staying away from interest rates above 20% and instead getting a secured card from a lender like Orchard Bank as a way to build up credit so that you can eventually get a card with a decent rate.
    Really? He recommends staying away from 20% credit cards?
    Guy's a real genius.:)
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  6. #6  
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    When I worked for Megabank, the gods had determined that we needed to have an average interest rate of 12 percent to be profitable. Well, there is what normal people consider profitable, and then there is what Megabank considers profitable.

    Of course, back then when you called Megabank you got an English (or press 2 for spanish) speaking US citizen who actually had the power to fix the problem on your account, reverse fees, change interest rates, find out why you didn't get the special offer and perhaps even do something about it. Now you get Mumbai.

    So not only did Megabank get rid of all those ridiculously expensive American employees, they are raising interest rates to a point which would make a shylock blush?
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  7. #7  
    There have always been people willing to pay the vig. Things are pretty much exactly the same today except that there's less forced sex or bodily injury involved.
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  8. #8  
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    Thanks Elizabeth Warren, Obama Credit Card Czar.
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    Quote Originally Posted by Calypso Jones View Post
    Thanks Elizabeth Warren, Obama Credit Card Czar.
    Thanks to all the whores in Congress who sell us out to banks and insurance companies.
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  10. #10  
    PORCUS MAXIMUS Rockntractor's Avatar
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    Quote Originally Posted by Novaheart View Post
    Thanks to all the whores in Congress who sell us out to banks and insurance companies.
    What are you mad because the banks were bailed out with our money and our children's money and then turn around and charge us interest rates of up too 59%, how unreasonable of you!
    The difference between pigs and people is that when they tell you you're cured it isn't a good thing.
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