While it's hard to argue with many of the Credit CARD Act's rules, we're clearly seeing one of the unintended consequences of the new law
Cleveland, OH (PRWEB) February 17, 2010
Credit card rates jumped 0.42 percent in the last month alone, as credit card issuers continued their scramble to make up for anticipated lost profits once new federal regulations go into effect February 22, according to IndexCreditCards.com, a credit card comparison Web site and leading online provider of credit card industry news and research. A complete report on current average rates in the various credit card categories tracked by IndexCreditCards.com is available through the site's Credit Card Monitor.
The new rules are part of the Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009, a sweeping reform that includes restrictions on rate increases and over-the-limit fees and is aimed at creating a fairer marketplace.
According to IndexCreditCards.com's latest survey, the average credit card rate offered new customers is 16.70 percent, the highest average calculated since the survey's inception in 2005. Moreover, most cards offer variable rates tied to federal interest rates. With this high-water mark reached when federal interest rates are still at an all-time low, credit card rates should only increase further.
"While it's hard to argue with many of the Credit CARD Act's rules, we're clearly seeing one of the unintended consequences of the new law," said IndexCreditCards.com founder Adam Jusko. "We seem to be going from a marketplace in which a relatively few cardholders got into deep trouble to one in which the misery is more evenly spread. Sure, there will be fewer "gotchas," but the price to pay for fairer credit seems to be higher interest rates all around. For some, it could even mean being cut off from credit altogether."
The average credit card rate for non-reward consumer credit cards rose to 15.36 percent, up from 14.75 percent last month, and the average rate for reward cards increased to 17.28 percent from the previous average of 16.94 percent.
Financial institutions represented in the survey include American Express, Bank of America, Capital One, Chase, Citi, Discover, HSBC, PNC/National City, Iberia Bank, Simmons National Bank, U.S. Bank, Wells Fargo, and more.
IndexCreditCards.com is a credit card comparison Web site that offers one of the most comprehensive indexes of credit cards available on the Internet today, with a master listing of more than 1,200 credit cards. Newsweek has called it "as comprehensive a list as you'll find of all the credit card offers on the table now." The site also features credit card news, research and categorized credit card offer lists based on lowest interest rates, reward programs, business credit cards, student credit cards and credit cards for those with poor credit histories.
Information provided in this release may be reproduced free of charge, provided credit is given to http://www.IndexCreditCards.com.
Adam Jusko is available for interviews or commentary on this topic and other topics relating to credit cards and credit card trends.