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At an average of 15% APY, credit cards witness new highs on interest rates

Tuesday, February 01, 2011

If you thought that the recently introduced CARD Act would have any negative impact on the credit card lenders, you are far from being correct. In contrast, with the average interest rates across the country reaching 15%, new highs are being set right at the beginning of 2011.

The banks do not seem to think twice before levying interest rates on their customers. While the individuals with good credit might seem to get reasonable rates from financial institutions, the ones with poor credit history are the ones who will face the music. The interest on credit cards for bad credit is expected to go up to 59% APY.

One of the main reasons for this is that, people thought the CARD Act would work to their benefit. The CARD Act did enable banks to increase the interest rates, after the cards have been issued. Certain fees have also been capped to prevent the banks from burdening the customers. However, the banks seemed to have found the loophole they have been looking for. With the legislators not placing a cap on the deadly interest rates, banks have decided to hike them in order to make up for the loss of revenue due to the CARD Act.

According to credit card experts, the interest rates on credit cards have gone up by at least 20% over the last 24 months, setting an all time high record. Maurice Hinchey, a Congressman from New York has, in fact, drafted a proposal to cap the interest rates at 15%, but the legislation is yet to be passed.