As Bank Credit Is Tightening, Comparing APRs Is a Must
Though the Federal Reserve has lowered its Prime Rate, it doesn't seem to help in the environment of the American consumer debt peak and tightening credit. According to Consumer Records, debt has increased by 8% from the last year and reached a record height. Given that the banking industry has also incurred great mortgage losses, lenders are trying to compensate by toughening terms for all their customers, whether good or bad risk. They are doubling and even tripling interest rates on card products without a proper explanation of the reason. This is a bad business, but while customers cannot possibly negotiate a better rate, they still can opt out and apply for another plastic, previously comparing APRs on a number of deals.
Advanta Bank has traditionally offered some of the best deals for small business owners. Its interest rates could be as low as 7.99% on purchases as well as transfers. Under the current developments the issuer jacked the interest up to 30%, possibly the highest figure on the market today.
One of our readers, who owns Advanta Platinum Business card, says the bank refused to give a detailed explanation or just couldn't do it. He is now going to close the account with Advanta Bank and find a new business offer, with a more favorable interest rate.
Curious, but interest rates hikes hit all, bad and good credit customers. But the bank is not going to tell you they compensate for card debt and mortgage losses by getting you to pay more in interest charges.
Customers of Bank of America may also face risk of a jacked APR, even if they make payments on time and have never had problem credit.
Credit Cardholders Bill of Right has provisions prohibiting the predatory lending practice bust since it hasn't come into effect yet, banks are free to change the rates under the card agreement point, which sounds like "we reserve the right to change your interest rate at any time for any reason".
If you ever got your APR increased for no evident reason, consider switching onto another bank card and make sure you know all options available. Comparing APRs and scrutinizing the fine print is almost a must if you don't want to trade bad for worse.
Despite the tightening credit, Consumer Reports assures it is still possible to find a low interest rate and no annual fee card application. If you're a rewards user, you'll find cards that doubled their points or cash back earnings recently. Such are Discover® Motiva Card & Discover® Open Road Card that doubled their cash back bonus on grocery store purchases for November and December. In this case, you are to choose either a favorable interest rate or a lavish reward program, because their combination is rather rare.
Generally, you are allowed to pay off your balances at the initial lower rate if you decide to close the account with your bank. If you already found a better deal, consider making a balance transfer and pay whatever you still owe at a 0% or lowest APR. Whichever way you take, go online to see all the offers available, compare them side-by-side to find the best variant to apply for.