Rate freeze on credit card debt may not be meaningful
Though a major bank announced it is putting a hold on credit card debt rates, one columnist is wondering what good it might actually do.
In writing for TheStreet.com, Odysseas Papadimitriou expressed wonder in the fact that media outlets seem to be lauding the efforts of Bank of America, which recently announced it will not increase interest rates on credit card debt until new laws are in place.
The time from Bank of America’s announcement about rates until the February 2010 Credit Card Accountability, Responsibility and Disclosure Act deadline marks the period of the bank’s rate freeze. However, Papadimitriou notes the rate freeze is only effective if the bank has a number of customers with low, non-introductory rates. After all, if the bank has already increased rates on large number of customers, what good is the sudden rate freeze?
The rate freeze, Papadimitriou said, would be notable if the bank has millions of accounts that have rates below 10 percent that are not tied to promotional offers.
A recent report from Bloomberg noted that Wells Fargo plans on increasing interest rates by 3 percent for many of its customers prior to rule changes.