Credit Card Rates RiseOnce upon a time credit cards came with a fixed rate, but those days are now long gone. Today four out of every five cards has a variable rate, and those rates have been on the rise. Over the next year,credit issuers will continue to raise their interest rates and lower credit lines. What does this mean for card holders? Certainly no sense of security with your current credit card provider. The combination of higher rates and higher minimums is expected to put a financial squeeze on more businesses and consumers, leading to higher default rates by the end of the year. Every major credit card issuer has been approving fewer new applicants, reining in credit lines and canceling unused accounts. Credit card lenders are expected to cut the lines of credit they extend to borrowers by a total of $2.7 trillion through 2010. This is equivalent to 57 percent reduction in the credit they made available two years ago at the height of the boom. Every credit card owner should be checking their interest rates regularly. Many credit card companies are rushing to raise rates and tack on fees before the law, slated to take effect February 22, will limit such moves in the future. Come late February, the CARD act will prohibit lenders from raising rates on outstanding card balances. This law is way past due and coming to quite a relief for many credit card holders. |
