New Rules Forcing Credit Card Rates Higher

New York, NY, Aug. 27, 2010--While interest rates continue to fall for home buyers, interest rates for credit cards are moving higher, according to a story in the Wall Street Journal.

New credit-card rules that took effect Sunday limit banks' ability to charge penalty fees. Earlier rule changes restricted issuers' ability to adjust rates on the fly. Issuers responded by pushing card rates to their highest level in nine years.

In the second quarter, the average interest rate on existing cards reached 14.7%, up from 13.1% a year earlier, according to research firm Synovate. That was the highest level since 2001.

The Credit Card Accountability Responsibility and Disclosure Act of 2009 has given card issuers less flexibility to raise interest rates. At the same time, issuers are still dealing with credit-card delinquencies that remain above historical levels.

Most changes affect only new credit-card purchases.

Meanwhile, lenders are quicker to reduce credit lines at the first signs of financial stress.
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