Originally published August 15 2005
Not paying credit card bills on time can lead to higher interest rates
by Mike Adams, the Health Ranger, NaturalNews Editor
Credit card companies are starting to penalize people who do not pay their credit card bills on time or who have rollover charges by raising their variable interest rates and late fee charges.
The average variable interest rate for credit cards has climbed to 12.96%, up from 12.12% last year, according to a survey released Thursday by Consumer Action, an advocacy group in San Francisco.
The latest study of credit cards from 47 issuers was done from April 1 to June 21.
Paying another creditor's bill late or having too much debt can also jack up the penalty rate.
Nearly half of issuers surveyed by the advocacy group base their rate increases partly on how consumers handle their other credit accounts.
Discover and MBNA, which is in the process of merging with Bank of America, are among the major issuers who have done that in the past year.
"Fixed rate means that it's fixed until credit card issuers decide to change it, and they can do that with as little as 15 days' notice," says Greg McBride, a senior financial analyst at Bankrate.com.
Credit card issuers are just protecting themselves, says Keith Leggett, a senior economist at the American Bankers Association, because, "If your cost of funds is going to rise, you are going to hedge yourself against these interest-rate movements by issuing more variable-rate cards."
About 103 million Americans carried balances, averaging about $9,312, on their cards at the end of last year, says CardWeb.com, a credit card research firm.
Card holders who don't want to accept rate or fee increases have a few options: Negotiate with the company for a better rate or close the account.
Searching for better deals, even with the same issuer, can make sense in a competitive market.
Switching to another credit card "has grown a lot in popularity in this rising-rate environment," says Curtis Arnold, founder of CardRatings.com, a site that reviews credit cards.
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