Credit Card Interest Rates Hit New Highs
Credit card companies are up to their old tricks.
With the last of new credit card laws scheduled to go into effect this February, banks are doing just as predicted - finding new ways to charge credit customers.
On the bright side, the legislation is already helping consumers in a few key areas. You may have already noticed that you're receiving bills far in advance of the due date, making it easier to avoid those outrageous late fees. And if worse comes to worst and you do make a late payment, you still have 60 days to pay up before you're punished with a higher interest rate (previously, banks could jack up your rate if you were as much as an hour past cut off time on the due date).
But here's the catch. Though your credit card company can't raise your rate on existing balances for no reason, they will be able to raise rates on variable rate cards or on future balances of any card - sometimes to as high as 80 percent!
Yes, you read it right, First Premier Bank will debut a 79.9% APR credit card next year, according to the Associated Press. That's on top of a $75 annual fee and a $29 fee for exceeding the $300 credit limit.
First Premier is a subprime credit issuer, meaning they'll often give you a card even if you have bad credit. Pre-reform, cardholders were required to pay $250 a year in fees in exchange for their credit account. But since those unfair fees will no longer fly, First Premier instead increased its formerly 9.9% rate seven times over. That means credit customers will be paying $20 a month in interest for a $300 balance. Imagine how much you'd be paying with a $1,000 balance - or more.
If there was ever a reason to cut back on credit, this is it. Instead of looking to credit reform to make using credit easier, why not let it help you wean yourself off the plastic? With more time to pay each month and more restrictions for creditors, there's no better time to get the ball rolling and start paying down that debt. If a too-large debt is sinking your finances, nip the problem in the bud before sky-high interest rates make things worse. Bankruptcy can make it possible.
Find out how bankruptcy can make paying off even the largest of debts possible when you sign up for a free one-on-one debt analysis with a Chicago bankruptcy lawyer. Start the new year off right with a fresh financial start.