Industry analysts are beginning to find that while the monumental Credit Card Accountability, Responsibility and Disclosure Act gave more protection to consumers, it is showing signs of backlash in the form of rising interest rates. Issuers and banks alike are looking for new ways to profit, after being handed a list of restrictions and limitations. Now, many are fighting back by inching rates upward and penalizing members in good credit standing.
A recent study by Pew Charitable Trusts found that although the CARD Act may have kept issuers from raising rates for consumers already drowning in debt, they are instituting higher rates and fees for other members who have paid their bills on time.
“This new statutory protection does not mean a consumer can now relax,” Conrad Ciccotello, director of Georgia State University’s Personal Financial Planning Program, told the Atlanta Journal-Constitution. “There are still a lot of high interest rates and penalties you can incur if you aren’t paying attention.”
More credit card issuers are switching their rates from fixed to variable as well. A spike in interest rates can result in mounting debt for cardholders already behind on payments.