The downturn in economy has led to the downward slide of interest rates on mortgages, autos and many other consumer loans but credit-card rates are an exception as it stands at a nine-year high—and are likely to increase in future.
The disconnect is significant largely because of the based on the gap between the prime rate and the average credit-card rate charged to Americans with cards in their wallets. According to research firm Synovate, a unit of Aegis Group PLC, the current difference is of 11.4 percentage points, the largest in at least 22 years.
Meanwhile, new rules designed to protect credit card users from “unreasonable late payment and other penalty fees” come into force from today. Under the new rule, which were imposed after the introduction of Wall Street reform bill, the companies will not be allowed to charge more than $25 for late payments except in extreme circumstances. The Federal Reserve said that the new rules would also disallow the companies to prevent them from charging customers for not using their cards. Notably, the regulations were approved by the Federal Reserve.
Experts however, are not sure whether the new law would help the consumers or not. The law "really allows a lot of leeway to issuers to determine what's justified. It'll be hard for even a good regulator to hold issuers to a really tight standard on this," said Josh Frank an expert to Oregonlive.
The law gives consumers the right to call their providers and remind them about the new provisions. "If you don't get satisfaction with them, tell them you will pursue this with the regulator. Or simply ask that the rate be lowered. You might have a lot more leverage if you try this in February," added Frank.
