Credit card users could see higher interest rates this year

Consumers are vowing to improve their finances at the start of 2011, and hoping to put behind a year that was filled with foreclosures, credit card debt and bankruptcy.

At the end of 2010, many consumers found themselves being cut out of the credit card market altogether, as banks performed a record number of charge offs on accounts that were consistently late with payments.

However, for these fiscally troubled consumers, returning to credit cards could mean accepting higher interest rates, The Boston Globe reports. According to recent statistics, the average rate on a new credit card offer was 14.4 percent, up from 10.8 percent two years ago.

The primary reason for this increase is that recent legislation prohibits credit card companies from raising interest rates within the first year. As a result, many lenders are simply setting a higher rate at the start for new applicants to offset these losses.

This means that many of those consumers who were rejected from the credit system due to outstanding debt may find themselves in the red again if they decide to re-enter the credit card system this year.