When the new set of credit card rules and regulations took effect last year, many financial experts and banks fears a sudden increase in the interest rates on the cards along with a steep hike in the annual fees and increase in the other charges associated with the credit card.
However, when one looks at the new policies that have been brought in by credit unions and banks after the implementation of the rules, the fears seem to be baseless. The Safe Credit Cards Projects, conducted by the Pew Charitable Trust, has revealed that, contrary to the fears, in interest rates on most of the credit cards have remained steady over the past year and there has been a drop in various fees associated with the credit cards too. The fact that the interest rates have remained steady is the key points because most of the banks and credit unions, fearing the worst, had increased the rates on their credit cards before the new rules came into play.
Safe Credit Cards Project’s Director, Nick Bourke, said that the increase in interest rates that were noticed in the year 2010 has not continued into 2011 and that is a good sign.
The study by Pew, which is due to be released this Tuesday said that the average interest rates for credit cards being issued by banks currently varies between 12.99% and 20.99% depending on the credit score and credit history of the applicant. The interest rates on credit cards being offered by credit unions has increased marginally and now ranges from 9.99% to 17% depending on the credit worthiness of the applicant. The interest rates for cash advances on credit cards and the penalty charges for late payments also has not varied much since the implementation of the new rules.
One aspect that the study has not mentioned is that most of the cards now carry variable interest rates which mean that customers will start paying more if the prime rate increases.
The Pew study also examined other aspects of credit cards such as transactions surcharges for international payments, balance transfers and cash advances and found out that there was very little variation here as well. The credit cards offers being made by 12 major credit unions and 12 prominent banks were considered, as a part of this study. Put together, these 24 financial institutions account for over 90% of the credit cards dues in the United States.