Sunday, November 01, 2009

Your credit card interest rate

You're probably wondering why credit card companies are increasing your interest rate. Both of my cards have significantly increase rates in the past thirty days. I was going to call, but then since I don't carry a balance, I forgot about it.

The well read Rachel Beck explains why pending legislation is prompting card companies to increase rates. The CARD Act, introduced by Chris Dodd (Connecticut Democrat), will freeze rates on existing balances. That is, if you have a balance of $1,000 and you're paying 10%, card companies can't increase your rate to 15% on said balance. A rate increase would only be on purchases after the increase.

On the surface, I agree that the new regulations seem to make sense. It purports to fend off predatory rate increases. But was there any thought that companies would counter the forthcoming rules by simply increasing everyone's rates before the regulation goes into affect?


Anonymous said...

Actually, I believe we know why cc companies raise the rate--to make more $$$. Same reason TCF moved its credit card operation to South Dakota--raise rates, make more money. I showed them by moving my vast fortune to another bank. So there.


Mac Noland said...

Yah, they are profit hungry like everyone else. I don't carry a balance so I'm not that worried about it. Though I would have liked to keep my lower rate, just in case.