In The Past Six Months, All Of The Top Eight Credit Card Companies Have Applied Increased Interest Rates On Existing Cardholder Balances
Came across this recent report and it seems to re-affirm what you may be hearing on TV and Radio about even customers in good standing experiencing rate play from their credit card companies.
We took a quick sampling of credit card issuers’ recent activities to see how they have responded to the Federal Reserve rule changes that were announced in December 2008 but won’t take effect until July 2010. We found the top eight issuers, who account for 80 percent of credit card balances, are raising interest rates on a larger portion of customers than usual and increasing the number of fees they impose. The new Fed rule will ban some but not all of these activities.
Perhaps most notable is what these issuers — Citigroup, Bank of America, JP Morgan Chase, Capital One, HSBC, Discover, American Express, and Wells Fargo — have not done. All continue to apply a customer’s monthly payments to the least costly balance first, leaving the most expensive to continue to grow. None have changed their policy of imposing interest rate hikes for any reason, any time. Additionally, there is no evidence that any of these companies has expanded the period of time between when monthly bills are sent and when late fees apply.
Many folks look into balance transfer cards for the above-bolded reason. To avoid a high interest rate on one card, a more competitive one is used to get the cardholder in a better position for repayment. But if that card is also subject to unannounced increases in rates, a consumer is left wondering what they can possibly do to get ahead of the curve. Especially when seven of the top eight issuers increased their penalty APRs. Many families are finding themselves stuck between a financial rock and a hard place.
No bright light on the other side of the tunnel either, as new trends in unemployment rates show increases and no lack of momentum:
The number of idled workers filing new unemployment benefit claims climbed more than expected last week, driven higher by filings in car-industry states.
Separately, U.S. producer prices climbed in April more than expected because of a jump in food costs, but core wholesale inflation rose only mildly as the recession robs companies of pricing power.
…
Wall Street economists had expected a 10,000-claim increase to a level of 611,000, according to a Dow Jones Newswires survey. The prior week’s level was revised to 605,000 from a previously estimated 601,000.
The four-week average, which aims to smooth volatility, rose by 6,000 to 630,500.
The larger-than-expected increase in new jobless claims was a disappointment, given a report last week that indicated a mild moderation in layoffs. The Labor Department had said 539,000 non-farm payroll jobs were lost in April. Payrols fell by 699,000 in March. Since the recession began in December 2007, the U.S. has shed 5.7 million jobs.
…
The tally of continuing jobless claims — those drawn by workers collecting benefits for more than one week — rose 202,000 in the week ended May 2 to 6,560,000, the highest level since the government started keeping track in 1967. Continuing claims lag new claims by one week.
The unemployment rate for workers with unemployment insurance rose 0.1 percentage point to 4.9%.
Not adjusted to reflect seasonal fluctuations, Illinois reported the largest increase in new claims during the May 2 week, 2,052, due to layoffs in the construction, trade, and manufacturing industries.
Those numbers only reflect actual claims too. They don’t account for underemployment and people working multiple part-time jobs to make it by. We don’t have a crystal ball over here, but I wouldn’t be calling an end or bottom to anything, anytime soon.
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