Better Get Ready. Credit Card Interest Rates Prime For Rate Hikes.
http://myvesta.org.uk/articles/articles/4052/1/Better-Get-Ready-Credit-Card-Interest-Rates-Prime-For-Rate-Hikes/Page1.html
By Steve Rhode
Published on 01/25/2008
With banks scrambling to find new ways to refill their vaults because of all the money they lost in the greedy subprime meltdown be prepared for your credit card interest rates to increase.
While interest rates are coming down and people with manageable debt still have choices and options, those people carrying balances on their cards are prime targets and ripe for the picking by banks to raise the interest rates on those current balances.
Follow along for a minute. The bank goal is to get you in a position where you are unable to pay off the balance in full on a monthly basis. Once they’ve got you trapped then then can pretty much do whatever they want to you because they know they gotcha.
The first instance I heard about this was from our old friends at MBNA / Bank of America and their FIA Card Services wing. Apparently customers are receiving notices which raise their current balance interest rate from 7.99% to 21.99%. Nice!
Now, if you were a bank and wanted to squeeze some more juice out of your customers that were trapped, what would you do? You already know that those with higher balances are probably not going to be able to pay off those cards in this confusing economic environment. You also know that the number of people carrying a balance from month to month is above 50% of your cardholders.
What the banks will probably say is that the higher interest rate is for your protection as an incentive to pay your debt back faster.
And let’s not forget the byproduct of an interest rate increase, either your monthly minimum payment is going to increase or far less of the minimum payment will actually go towards reducing the debt.
For people that are already finding it difficult to deal with escalating life costs like fuel, heating, electricity, etc. What does increasing the interest rates accomplish? Hum, how about this, more profit on the bank books now to offset losses.
With banks suffering major losses as a result of the subprime mess, cardholders carrying balances could be an easy target for immediate cash injections to the bank.
Be Prepared
With banks scrambling to find new ways to refill their vaults because of all the money they lost in the greedy subprime meltdown be prepared for your credit card interest rates to increase.While interest rates are coming down and people with manageable debt still have choices and options, those people carrying balances on their cards are prime targets and ripe for the picking by banks to raise the interest rates on those current balances.
Follow along for a minute. The bank goal is to get you in a position where you are unable to pay off the balance in full on a monthly basis. Once they’ve got you trapped then then can pretty much do whatever they want to you because they know they gotcha.
The first instance I heard about this was from our old friends at MBNA / Bank of America and their FIA Card Services wing. Apparently customers are receiving notices which raise their current balance interest rate from 7.99% to 21.99%. Nice!
Now, if you were a bank and wanted to squeeze some more juice out of your customers that were trapped, what would you do? You already know that those with higher balances are probably not going to be able to pay off those cards in this confusing economic environment. You also know that the number of people carrying a balance from month to month is above 50% of your cardholders.
What the banks will probably say is that the higher interest rate is for your protection as an incentive to pay your debt back faster.
And let’s not forget the byproduct of an interest rate increase, either your monthly minimum payment is going to increase or far less of the minimum payment will actually go towards reducing the debt.
For people that are already finding it difficult to deal with escalating life costs like fuel, heating, electricity, etc. What does increasing the interest rates accomplish? Hum, how about this, more profit on the bank books now to offset losses.