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Entries in Rates (2)

Thursday
Jan052012

Credit Card Rates Rise to Four-Year High

Comstock/Thinkstock(NEW YORK) -- If you're looking to take out a new credit card, now might not be the best time: credit card rates have risen to a four-year high. What's worse, an act of Congress meant to protect consumers is making matters worse.

"Rates currently are the highest since we've been tracking them," says Ben Woolsey, director of marketing for CreditCards.com, which has tracked card rates every week for the past four years.

The average rate nationally right now, based on new card offers by 100 of the most popular issuers in the U.S., stands at 15.14 percent, up from 14.75 percent six months ago.

The average includes several different kinds of cards -- airline, cash-back, low-interest, student, and business, for example -- but excludes ones with introductory "teaser" rates.  For cards with variable rates, only the lowest is considered for the average.  Thus, some consumers are paying far more than the average suggests. The current rate for card holders with bad credit, for example, is 25 percent.

While credit card rates remain high, most other interest rates have reached 50-year lows. The prime rate, which banks charge their best customers, stands at just 3.25 percent.  The federal discount rate -- that's what it costs banks to borrow from the Federal Reserve -- is just .75 percent.

Woolsey says the 15.14 percent average credit card rate represents a rise of some 300 basis points, or 3 percentage points, from where the average was in 2009 (12.3 percent) when Congress, in an attempt to reign in "unfair or deceptive" practices, passed the Credit Card Accountability Responsibility and Disclosure (CARD) Act.

Some of that act's unintended consequences, he says, have arguably made life worse for consumers.

The CARD act restricts companies' ability to jack up rates on existing balances without first giving account holders proper notice; it forbids lenders from zinging customers with certain fees and penalties. 

It does not, however, address card interest rates per se. Prohibited now from raising rates on existing balances -- except under certain circumstances -- lenders are instead slapping higher rates on new accounts.

Copyright 2012 ABC News Radio

Thursday
Jan062011

Blue Shield Policyholders May Face Rate Hikes Up to 59 Percent

Photo Courtesy - Getty Images(LOS ANGELES) -- Thousands of Blue Shield individual policyholders could see their insurance rates increase by as much as 59 percent on March 1, The Los Angeles Times reported Wednesday.

The California-based health insurer attributes the hikes to rising healthcare costs and expenses stemming from newly enforced healthcare laws.

If implemented, a total of 193,000 policyholders would have their rates increased by an average of 30 to 35 percent.  Out of that total, about one-in-four customers would be faced with cumulative increases of more than 50 percent throughout a five month time period.

Blue Shield policyholders, including Michael Fraser of San Diego, were notified of the successive rate hikes.  After reviewing the notice, Fraser learned that his monthly bill would go up from $271 to $431, an increase of 59 percent.

California insurance commissioner Dave Jones' office is reviewing the proposed increases.

Copyright 2011 ABC News Radio







ABC News Radio