Banks Raise Interest Rates on Credit Cards
As mentioned in a previous blog post – “Credit Card Spending Down; Trend will Reverse“, banks are loosing money due to people spending less due to the shaky economy.  Recently, banks have been combating these loses by increasing the credit limits on outstanding balances.  Therefore they will earn more when people miss a payment.
From the Wall Street Journal -
Bank of America Corp. will hike interest rates on as many as four million U.S. credit-card customers who carry a balance, according to The Wall Street Journal.
Other banks, facing delinquencies, have also increased the rates for customers carrying a balance.
What does this mean for students?
For most students who hold credit cards, this will not affect you because you most likely have a card with a somewhat high interest rate already.  According to the article, banks are increasing the rates on cards with balances that have low interest rates – around 7-9%.  However, this is just stresses the point that you should pay off your balance in full each month! As this article proves, credit card companies own the right to do whatever they want with your interest rates once you carry a balance on your card.  If you only put a small amount on your card each month, and pay it off in full, you will gain the benefits of having a credit card such as building your credit score and reward points, but will not have to worry about debt and ridiculous rate increases.
Want to build your credit score without worrying about debt? Â Consider a prepaid credit card. You can use a prepaid card just like a credit card, but can only spend the money that you put on it from your checking account, which is a great option for students. Learn about prepaid credit cards here.
Debt getting out of hand? Â Read our blog post to find 3 ways to get out of debt.
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Raising interest is something that is bound to happen in these times. If you dont like it dont charge it. People these days need to look in the mirror when facing spending decisions instead of trying to place blame on credit card companies