Banks Raise Credit Card Debt Costs Ahead Of Reform Deadline
[Jul 2, 2009.]
Banks Take Opportunity To Increase Credit Card Profits Before It's Too Late
Credit card reform may be in the sights of consumers, but for the time being, more credit card companies are taking their chances to increase profits while they still can. In the previous month of May, credit card losses were at a record level of 10.6 percent; a 65 percent increase since 2008, and the highest rate seen since 1989. And according to recent data from Fitch Ratings, credit card losses were still at record levels of 10.44 percent in June. As a result, many big name banks and credit card companies have decided to pass the costs to consumers in hopes of recouping some of these losses.
Three of the six largest credit card issuers (Citi, Chase, BofA) have since decided to follow this move and increase the cost of credit recently. Most notably, according to Credit Suisse report, Citi has hiked interest rates on about 15 million U.S. credit card accounts--some rate increases reportedly going as high as 29.99 percent. One analyst from Credit Suisse expects APRs to continue to trend higher until the credit reform finally takes effect in February 2010.
Credit Card Issuers Cut Back On Other Perks
In addition to interest rate hikes, many other companies are cutting back on other services to recoup their losses. For instance, many creditors have resorted to cutting existing credit line limits; so while many consumers might be looking to reduce their debt, card issuers are now making sure of it. Other changes include higher minimum payments, increased fees on over-limit purchases, and more expensive cash-advances. Other creditors who offer reward points, or cashback incentives, are also cutting back--in some cases, cutting programs out entirely.
How Can You Consolidate Credit Card Debt?
One of the most common ways consumers typically consolidate credit debt is through a second mortgage or home equity line. For homeowners with enough equity, mortgage interest rates are vastly superior to credit card rates. And as an added bonus, most appreciate the fact they are no longer under the mercy of these struggling creditors. Fortunately, with mortgage rates at their current levels, many homeowners will likely benefit from a traditional mortgage refinance, while simultaneously consolidating their debts into the new mortgage.
For more information on possible debt relief programs, a debt consolidation loan specialist can be found on this page here.
About Author:
Renee Morgan has been a loan officer for over eighteen years. She is also a freelance writer and guest expert for radio and TV.
Recent News:
- The Unsung Heroes of Unsecured Personal Loans: Bill Collectors
Consumers who make use of unsecured personal loans may not have the best perception of bill collectors. Especially for people who have taken out high interest bad credit personal loans, it’s easy to view bill collectors as a pack of worthless parasites who have no redeeming value whatsoever. However, the reality is that without bill collectors, [...]
[March 11th, 2010] - Refinancing Your Mortgage Loan: 5 Things to Know
Refinancing your mortgage can lower mortgage rates and monthly payments, but there are some important considerations. Here are five things you should know when efore shopping for a refinance mortgage.
[March 10th, 2010] - Debt Solutions Made Easier By New Credit Card Laws
In an effort to strengthen consumer protections, the government has begun to enforce new credit card laws. Debt solutions are now a little easier.
[March 5th, 2010] - Are Home Equity Loans Cheap Loans?
If you are looking for a cheap loan, and you own your home, consider a home equity loan. Yes, home equity loans are cheap loans! Home equity loans are normally based on Prime Rate which is currently 3.25%. The home loan lender will add a margin for profit, bringing the interest rate to about 4% on [...]
[March 5th, 2010] - Pros and Cons of Payday Loans
While payday loans generally have a bad reputation among financial experts, there are times when a payday loan can be the best option for the consumer.
[March 5th, 2010]
Easily subscribe to the rebuild.org news feed.
Read our news without even visiting our site!
Rebuild.org monthly news archive
- March 2010 (9)
- February 2010 (23)
- January 2010 (27)
- December 2009 (27)
- November 2009 (24)
- October 2009 (28)
- September 2009 (24)
- August 2009 (32)
- July 2009 (41)
- June 2009 (43)
- May 2009 (42)
- April 2009 (48)
- March 2009 (48)
- February 2009 (29)
- January 2009 (45)
- December 2008 (45)
- November 2008 (24)
- October 2008 (7)
- August 2008 (17)
- July 2008 (17)
- June 2008 (47)
- May 2008 (43)
- April 2008 (50)
- March 2008 (10)
- February 2008 (14)
- January 2008 (8)
- December 2007 (10)
- November 2007 (20)
- October 2007 (21)
- September 2007 (18)
- August 2007 (28)
- July 2007 (31)
- June 2007 (17)
- May 2007 (12)
- April 2007 (8)
