American consumers are already having a hard time trying to get a handle on their finances in a time of economic crisis and increasing unemployment rates. The credit term changes that credit card companies have been introducing could not have come at a worse time, though they would be quite unwelcome at the best of times.
Many American credit card holders are getting hit with interest rate hikes as the holiday season – a time for increased shopping activities among Americans – gets closer. A lot of them are going to see their interest rates become twice as high or even three times as high as the original rates. Grim financial times are ahead for American credit card holders, it seems.
Interest rate changes are not the only credit term changes that credit card companies are issuing which are hurting card holders. There is also the switch from fixed rate to variable rate interests for the majority of credit card holders. Variable rate interests are pegged to the market index which means that card holders might be seeing their interest rates go up anytime soon. Notably, variable rate interest credit cards also free credit card companies from the responsibility of informing credit card holders of interest rate changes.
As a matter of fact, a lot of the changes that credit card companies are introducing can be directly attributed to the upcoming Credit CARD Act which is set to activate on February of next year. Credit card holders, already having a hard time trying to keep their finances in check, are now facing rate hikes, lowered credit limits and minimum monthly rate hikes just to name a few and it is ironic that they are facing these difficulties due to the Credit CARD Act which is a set of legislation created for their own protection from credit card companies.
According to the results of a survey from Rasmussen Reports, half of the survey's respondents were hit by interest rate hikes during the last six months. Another survey from Credit.com showed that almost one third of American consumers had their rates hiked unexpectedly. This is almost double of the figures taken during a previous analysis done just six months past.
Industry experts say that the recent actions of credit card companies is having a very severe effect on consumer confidence on the credit industry. This is especially damaging to credit card companies considering the already low consumer confidence that they have.
Legislative director of Consumer Federation of America, Travis Plunkett said, “It seems like they're hurting the customers they need the most. What the industry needs most is trust, having lost it to the traps and tricks they've used for years, but they seem to be betraying it even further”.