Credit Card Interest Rates Forecasts
A couple of weeks ago, Federal Reserve made an unscheduled interest rate cut, forecasting further reduction if needed. According to Fed chief Ben Bernanke, the current situation is far from being favorable for catching up with outstanding bills and if the rates remain, banks should expect many more losses soon. With such Fed's dead set, major US card companies are leaving interest rates as they are. Some card features changes are constantly introduced and have already affected intro periods and perks on some deals. But as the annual percentage rates are the determinants of your monthly payments and cost of the deal on the whole, their relative stability or stagnation, whatever, is encouraging.
According to the data provided by the authoritative sources, rates have barely stirred in the last two weeks. Banks keep the rates steady regardless of the still worsening situation in the country's economy.
Tracked were nine credit card categories which interest rates can be changed any time for any reason under the cardholder's agreement terms and conditions. These are low interest cards, business and student cards, balance transfers, instant approval offers, bad credit cards, airline and other rewards cards. Of the nine, only one category - instant approval - had a slight rate increase, resulting in 11.65% up from 11.62% a week ago. Taking the figures of 6 months ago, which were 9.94%, instant approval got the greatest hike, together with business category which rose from 9.93% to 11.52%.
Surprisingly, bad credit lines became cheaper as compared to 6 months ago and the average interest rate on them is currently 10.82%. Cheaper are student cards which fell from 14.99% half a year ago to 14.34% and airline rewards offers which went from 12.47% down to 12.28%. Slightly higher rates are registered on balance transfers (9.74% 6 months back and 9.97% today), on low rate cards (increase from 10.61% up to 10.70%) and cash back (from 11.20% up to 12.13%),
Good news is that for two weeks in a row, interest rates stayed unchanged, whereas banks continue to incur losses and stand poorer revenues. American Express and Capital One are reporting weakness and drop in sales in the third quarter due to higher delinquency rates. Big retailers such as Target are experiencing huge write-offs of uncollected card charges and selling their customers' debts for pennies on the dollar to debt collection companies.
The rate figures presented above are only general, meaning that your personal regular and introductory interest rates will vary depending on your credit rating, length of payment history, income and other factors. Some cards online offer different rating for good and bad credit customers and you'll be disclosed which one you qualify after the issuer assesses your application. The same concerns the limit on the card you request. Typically, you'll know it only after you apply and provide the issuing company with personal and credit information. Your income plays an important factor for the lender's decision on the credit line.