Credit Card Deals - Interests and Fees Are Going Up!
These days, when credit crisis hits cardholders, no one is fully protected against interest hikes and exorbitant fees on their cards unless they have excellent credit history. Banks and card companies face an ever-increasing number of credit card delinquencies, and that's the reason why they're becoming more aggressive. They need to recoup their losses, and it doesn't really matter whether you are a diligent customer who pays credit bills on time, or you're still trying to kick the habit of being late with your credit card payments. They need to gain profits, and they are raising credit card fees and rates to squeeze more revenue out of their client's accounts.
Despite of dramatic Fed rate cuts, more and more credit users see escalating interest rates and fees on their credit accounts. To be more exact, banks and card companies boost the charges associated with more risk, like late payment fees, default credit rates, ATM fees, and balance transfer fees.
When Fed Reserve cut interest rates, many cardholders hoped to see lower rates on their cards, but no one expected just the opposite effect. Though it became cheaper for banks to borrow, it didn't stop them from raising interest rates on cardholders' accounts.
Credit card fees have been rising gradually over the years. Now that lending organizations face more losses, they raise fees and interests in order to offset those enormous losses. It's worth mentioning that last year, creditors accumulated over $18 billion in penalty fees and that's just on plastics. And that's the way banks and companies profit from credit card mistakes.
Major credit card companies and banks are setting stricter rules for their clients. This way, Bank of America charges 3% for shifting the balance instead of capping fees at $75 to $100. Chase bank has raised ATM fees for other banks' customers using its ATMs. Wachovia also practices higher fees for cash withdrawals made by other banks' customers.
Discover raised interest rates for risky new cardholders, as well as late fees for almost all of its cardholders. Such changes can be explained with the strategy of the company, it tries to estimate different risk factors and generally it results in higher annual percentage rates on plastics.
Banks raise interest and fees on the pretext of their right to adjust rates when a customer becomes a higher risk. In view of the fact, that there are many banks and companies that deal with bad-score clients as well as with those who have excellent payment skills, some diligent customers feel the sting too.
Consumer advocates have a great fear that too many people who struggle to stay financially afloat will see escalating fees and interests on their cards. Default rates may increase to as much as 30% and even more. The most irritating thing is that some creditors are still re-pricing account based on customer's credit score.
