Credit Card Rates Hustle Higher

[Zeno Swijtink]

Credit Card Rates Hustle Higher
KATHY CHU - USA TODAY
https://www.usatoday.com/money/perfi...ard-fees_N.htm

Even as the Federal Reserve has cut interest rates, financial institutions have sharply raised rates for credit card customers - even those who pay on time - as they grapple with losses from other bad consumer loans.

This month, Washington Mutual (WM) told some credit card customers that it was raising their rates by as much as 100%. Discover (DFS) is lifting its penalty rate to 31%, effective May 1, and may apply that maximum to consumers who exceed their credit limit twice in a rolling 12 months.

Bank of America (BAC) raised rates for some customers in March - triple, in some cases, though spokeswoman Betty Riess says, "It would be very rare."

All three institutions say they reserve the right to adjust rates when customers become higher risks. Keith Givens, a spokesman for Washington Mutual, also notes that the decision to raise some rates is "an indicator of overall deterioration in the economy."

As banks deal with tough business conditions, their definition of risk is evolving: "It's a lot like beauty; it's in the eye of the beholder," says Greg McBride, senior financial analyst at Bankrate.com.

That's why even responsible consumers whose credit scores haven't changed are being hit, says Joseph Ridout, a spokesman for Consumer Action, an advocacy group.

Bill Hardekopf, CEO of LowCards.com, says the card comparison site is "seeing more aggressive fees come out, and issuers are quicker to change interest rates."

He notes that as banks lose money on mortgage loans, it's logical they would try to boost credit card profits. "If one end of your business is suffering, you look to the other end to pick up the slack."

To boost profits, some banks have also imposed higher fees on consumers for paying late, transferring credit card balances and withdrawing money from an ATM.

The danger for card holders is that as some struggle to pay bills, steep rate or fee increases could nudge them toward default. Credit card delinquencies - a precursor to defaults - have been climbing, and overall consumer loan delinquencies are at their highest since 1992.

"If every (card company) raises your rate, you might have to write the debt off or go into bankruptcy," says Dan Blanton, of Pevely, Mo. He was notified this month that his Washington Mutual credit card rate would nearly double, to 24%.

Blanton calls the rate increase "totally unfair." He pays his credit card bills on time and generally pays more than the minimum due. He also has a solid credit score of nearly 700, he says. (Washington Mutual says it doesn't comment on individual accounts.)

Discover's new penalty rate applies to all new customers. About 10% of existing customers could also be hit with the 31% rate if they miss a payment or exceed their credit limit twice in a year. Bank of America and Washington Mutual declined to say what percentage of their existing customer base would be hit with higher interest rates.

[MsTerry]

Yes, but the good news is we get $300 from Georgie to pay off all of our debts!!!

[Zeno Swijtink]

Yes, but the good news is we get $300 from Georgie to pay off all of our debts!!!

That's just for kids! Yours will be a double whammy for the King.

Here's the date it will happen for you:

https://www.irs.gov/irs/article/0,,id=180250,00.html

[mykil]

Here is a thought, just don't use them. If you are tempted to do so burn them! I think it might be an addiction in general. I happen to have one and I am not even sure why. I had like five at one point and one day just started calling the companys and clling them. Now that is a challenge. They really do not want you to cancel your credit cards. I have used mine once in the last five years, just because it was the only thing that would work at the time.

If you are using your credit cards as a way of life, maybe you should reconsider you lifestyle. There is no need to live on credit and if this has become a way of life you might conceder some life modifications. If you partner refuses to stop using them call the company and cancel them. If you cannot stop using them burn them yourself.