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.