It seems that the government may have made an enormous mistake giving credit card companies several months leeway to adapt to the credit card bill. Credit card companies are now doing everything they can to increase profits before they have to deal with the credit card bill. Unfortunately for credit card holders, this means more expensive interest rates and fees and drying up credit.
The credit card bill, signed May this year, is set to become active next year, February. Although some of the amendments of the credit card bill will become active early this August, the majority of the amendments, especially the most useful ones, will still be several months away. In the meantime, credit card holders will have to face up to a growing number of credit card billing changes that are stifling credit and raising credit card costs for them.
Recently, Bank of America, Discover and JPMorgan & Chase moved their fixed rate credit cards to a variable interest rate setup. It seems that the credit card companies have found a loophole in the credit card bill which will negate the amendments in the bill stifling their abilities to change credit card interest rates at will. The credit card bill only controls credit cards with fixed interest rates. Nothing is said about variable interest rate credit cards. As a result, credit card companies are moving the majority of their credit cardholders to a variable interest rate card.
The move to a variable interest rate credit card will mean that the interest rate will be tied to a specific benchmark, the prime interest rate. As of the moment, the prime interest rate is near the zero mark, making the move somewhat attractive for credit card holders. However, by tying the interest rate to the prime interest rate, credit card companies are virtually guaranteed that the interest rate will rise in the near future.
Many credit card holders are finding themselves trapped by their credit companies. While many do not approve of the move to a variable rate interest rate, they have no choice in the matter. Credit card companies are firmly behind this move and are not allowing their customers to opt out of it.
As this is happening, credit card companies are also busy raising interest rates and fee charges for credit card holders. It may be time for credit card holders to rethink if maintaining a credit card is still worth it. A move to a debit card is highly recommended for those who cannot live without the convenience of plastic.