Payment Card News

Rate Jacking

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A new study concludes major credit cards fall far short of the new rules and have been jacking-up rates before the new rules take full effect. The Pew study finds that all of the credit cards offered online by the top bank card issuers continue to include practices that will be outlawed once all the new “CARD Act” rules take effect next year. According to the “Safe Credit Cards Project,” advertised credit
card interest rates rose an average of 20% in the first two quarters of this year. In July, median advertised APRs for purchases on bank issued cards were between 12.24% and 17.99%, compared to a range of 9.99% to 15.99% in December 2008. Other findings shows 99.7% of bank cards allowed issuers to increase interest rates on outstanding balances, from 93% in December; 95% of bank cards permitted issuers to apply payments in a way the Federal Reserve found likely to cause substantial financial injury to consumers; and 90% of bank cards had penalty rate hikes with
the vast majority imposed by “hair triggers” of one or two late payments in a year. The Pew data were gathered from July on nearly 400 cards.

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