RISMEDIA, Feb. 27, 2008-(MCT)-Where’s my rate cut? That’s the question asked by many consumers expecting an immediate break on their credit cards in light of the Federal Reserve’s short-term interest rate cuts.
In fact, some consumers complain that their interest rates are increasing. What’s going on?
Experts say card holders with variable rates — which takes in about 90% of us — can still expect to see rates go down. It’s just not going to happen as fast as we want.
“This is a turbulent time in the credit card industry,” says Bill Hardekopf, the CEO of LowCards.com.
He said banks are not only grappling with losses from subprime loans but trying to stem losses resulting from credit card customers who are defaulting because of their own financial problems.
At the same time, Congress is investigating the industry because of a tide of public complaints.
As a result, he said, there is pressure on credit card companies to be more responsive to the public while trying to find ways to keep their profits rolling in.
“As banks continue to deal with large losses, they are aggressively searching for a formula that includes higher rates and fees that will help maintain their revenue,” Hardekopf says.
Card issuers deny they are being motivated by losses. And industry officials note that a growing number of card issuers have found ways to reduce fees or keep them level.
In fact, Curtis Arnold, founder of CardRatings.com, said observant consumers with credit scores above 700 could find credit cards with interest rates of 10% or less.
And he said some issuers are trying to lure consumers with zero-percent transfer rates and other incentives.
He said the average interest rate of cards on his Website’s database is 12.82%. And he said consumers should still expect to see an impact on revolving credit-card debt.
So what should you do in the meantime? Here are some tips from Hardekopf:
- Watch your mail for notices warning of a rate increase but offering an option to close your account.
- Be aware of your annual percentage rate and, if you are a good customer, ask for an adjustment.
- Check your credit report to make sure a ding doesn’t cause your rate to go up.
- Shop around for cards offering lower rates. This is a competitive industry.
- Compare offers that come in the mail. But make sure to read all the fine print.
- If you are having problems, call your issuer right away to work out a payment plan.
- Paying off your balance each month is always the best plan to avoid interest and fees.
Copyright © 2008, The Kansas City Star, Mo.
Distributed by McClatchy-Tribune Information Services.
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