Payment Card News

Rate Tweaking

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As the Feds pushed the prime rate to 4.50% this week, a second major issuer has tweaked its variable rate structure, enabling it to pass along future rate increases quickly to cardholders. This week, MBNA is notifying cardholders it is switching its variable rate structure, based on the prime rate, to monthly adjustments instead of quarterly adjustments. The change is effective with MBNA’s October statements. MBNA will now reset its rates using the WSJ prime rate published on the last day of the month. MBNA currently uses March 15th, June 15th, Sept 15th and Dec 15th as rate setting days, applying the rate after the closing date of the billing cycle. Effective August 1st, Bank One changed its index date, from the 22nd day of the month to two days prior to the closing date of the billing cycle. Among the top ten issuers only Capital One resets variable rates quarterly, however it predominately issues fixed rate cards.

VARIABLE RATE INDEX DATES (Effective 10/1/04)
Top Ten Issuers Ranked by Outstandings
1. Citibank – Two days prior to the closing date of the billing cycle
2. MBNA – Last business day of the month.
3. Bank One – Two days prior to the closing date of the billing cycle
4. Bank of America – Last business day of the month
5. Chase – Last business day of the month
6. Discover – Last business day of the month
7. Capital One – March 25, June 25, Sept 25 and Dec 25: applies day after the closing date of the billing cycle
8. American Express – Higher of the 1st or the 20th of each month
9. Household Bank – Last business day of the month
10. Providian – 22nd day of each month
Source: CardWatch(R) (“www.cardwatch.com”:www.cardwatch.com)

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