Consumer Payment Card News

Rate Uptick

Thanks to the new credit card rules that go into effect shortly, core credit card interest rates have been rising and will likely rise higher by early next year. At the start of the recession average credit card APRs hovered around 16%, dropping to slightly below 14% earlier this year. However, rates have been rising for the past three months despite a prime interest rate stuck at 3.25%. According to CardTrak, credit card APRs declined from 16.02% in December 2007 (recession start) to 14.55% in September 2008 (credit crunch) to 13.96% in April 2009. The “CARD Act” was passed by Congress in late May. Since then variable rates have climbed to 14.39%. A study of 150 credit cards released last week by BillShrink found that purchase rates are up nearly 20%; balance transfer fee maximums have increased 34% (from a maximum average of $94 in January to maximum average of $126 in July); issuers have not changed their rates equally; issuers that have changed their rates the least include American Express and Bank of America; and issuers that have increased rates the most are Capital One, US Bank, Discover and Citi. BillShrink found that Capital One has increased purchase and balance transfer rates 50%; US Bank has increased purchase and balance transfer rates 33%; Discover has increased purchase and balance transfer rates 30%; and Citi has increased purchase and balance transfer rates 27%.

                       CREDIT CARD APRS
                       Dec 07:  16.02%
                       Jan 08:  15.79%
                       Feb 08:  15.64%
                       Mar 08:  15.60%
                       Apr 08:  15.35%
                       May 08:  15.11%
                       Jun 08:  15.08%
                       Jul 08:  15.01%
                       Aug 08:  14.77%
                       Sep 08:  14.68%
                       Oct 08:  14.55%
                       Nov 08   14.37%
                       Dec 08   14.17%
                       Jan 09   14.11%
                       Feb 09   13.98%
                       Mar 09   13.96%
                       Apr 09:  13.96%
                       May 09:  13.99%
                       Jun 09:  14.01%
                       Jul 09:  14.12%
                       Aug 09:  14.39%

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