Payment Card News

Rates Stand Still

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Even though the Feds decided to leave interest rates unchanged today most American credit cardholders will see their interest rates rise during July due to the prior Fed rate action. The 50 basis point jump in the Prime Rate on May 16 was not passed on to all cardholders yet, since some top issuers, such as Citibank, adjust rates quarterly instead of monthly. Therefore credit card interest rates that did not change during June while undoubtedly change during July. The last rate increase will cost American households with credit cards an extra $22 in interest charges over the next twelve months. Totally Americans will see interest charges soar by $1.7 billion over the next year due to the May 16 rate change. Of the 78 million U.S. households that have at least one credit card, the average credit card balance is now $7,564 and the average weighted interest rate is 18.11%. About 65% of the nation’s credit card issuers adjust rates monthly, while the rest adjust quarterly. As of year-end 1999, American consumers have racked up $462 billion in bank credit card debt and $88 billion in retail (store, gas, etc ) credit card debt.

HOW  THE  TOP ISSUERS  CHANGE  RATES
(the top ten bank credit card issuers)
ISSUERRATE  BASIS ADJUSTMENT  DATE
Citibank Prime Rate Quarterly
MBNA Prime Rate   Quarterly
BankOne/FUSA Prime Rate  Quarterly
Discover  Prime Rate  Monthly
Chase  Prime Rate  Monthly
Bank of America Prime Rate   Quarterly
Providian Fixed Rates   NA
Capital OneLIBORMonthly
FleetPrime Rate  Quarterly
Household   Prime Rate  Monthly
Source CardWeb.com, Inc.

AVG U.S. HOUSEHOLD
(average credit card debt per U.S. household with at least one credit card)
1990
$2985
1991
$3223
1992
$3444
1993
$3601
1994
$4811
1995
$5832
1996
$6487
1997
$6900
1998
$7188
1999
$7564
Source: CardWeb.com, Inc.

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