Credit Card Interest Rates Hit 9-Year High. Thanks, CARD Act!



Average interest rates have hit a new 9-year high of 14.7%, and we have credit card reform to thank for that. Por-kay? Unable to keep soaking you on the backend with hidden fees, tricks, and traps, issuers now have to push their profit-taking to the fore.

Credit-Card Rates Climb [WSJ via The Atlantic via Business Insider]


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  1. cynical_reincarnation says:

    And now we as a nation, need to start weaning ourselves off credit cards.

    I am trying to do my part…

    • c!tizen says:

      Been off the plastic for close to 6 years now. It’s hard at first, but if you can keep yourself from buying crap you don’t need, or waiting until you have the money to buy it outright, your spending habits get better and you end up with less stuff you never use because you effectively stop impulse buying.

    • tbax929 says:

      Agreed. I got all of mine paid off earlier this year and only use one now, which I pay off every month. They can raise the interest as high as they want – won’t affect me.

    • FrugalFreak says:

      I support that position, You are a winner!

    • smo0 says:

      No credit cards for me… in fact… it’s a step by step process regarding all things plastic… give up the credit.. give up the debit.. go back to cash. I’m in the process of giving up debit…. now THAT is tough.

    • Warren - aka The Piddler on the Roof says:

      My sentiments exactly. +10

      It’s time for the public to screw the credit card companies for a change…by just saying ‘no’ and walking away.

    • JRock says:

      We as a nation need to start weaning ourselves off of irresponsible credit card use. For the past 6 years I’ve been taking advantage of credit card points (I’ve received hundreds of dollars of gift cards by this point), purchase protection and extended warranties, while being RESPONSIBLE with my debt. The card is paid off every month, with my expenses being kept track of with an expense app on my phone.

      (And no, I haven’t always been this way, I made some mistakes with credit cards when I was younger but learned a lot from the experience)

      • Sheogorath says:

        Credit cards are a tool, and tools can be used responsibly or irresponsibly. It’s the difference between using a hammer to drive nails and trying to set broken bones with one.

      • GrimJack says:

        You do realize, of course, that if all credit card users behaved as you do that all the benefits you receive like points, cash back, purchase protections, etc., will disappear? Their existence was subsidized by the fees and interest charged to those who did not use their cards so wisely. The alternative is a hefty annual fee, or higher charges to merchants (and the cash-discount/card surcharge arms race that would follow).

    • Minj says:

      I love my credit cards. I’ve made thousands of dollars off of them in the form of rebates and interest. And on a broader scale, without the flexibility that credit allows, the economy would be half the size it is.

      • hansolo247 says:


        Without Credit, that would be true. Credit Cards are a net economic deadweight for most people.

  2. TuxthePenguin says:

    Funny… isn’t this exactly what a bunch of us were saying when the whole CARD act idea was coming up again and again?

    That being said, I look at this as a positive improvement. I want fees/interest to be as open and upfront as possible. That way I know about them and can AVOID them if at all possible.

    Sucks to those who cannot avoid them though. Ouch.

    • nova3930 says:

      No no no, thats not right. Credit card companies were supposed to magically stop doing things in their own self interest after the righteous congress critters got after them with the lawstick…..

    • mythago says:

      Exactly. The APR is front and center – you know what you’re paying. It’s not a bunch of secret magical fees triggered because you had one too many consonants in your middle name.

  3. BadgerPudding says:

    The CARD act was a good start, but I hope that there is serious talk about regulating maximum interest rates.

    • TuxthePenguin says:

      … restricting credit might be a good idea overall, but…

      Basic economics – the higher the risk someone poses on not being able to pay back their debts, the higher the interest rate you will charge them. Yes, that sounds kind of backwards and a self-fulfilling prophecy, but it does work out that way… I’ll leave the mathematical proof to someone else. By putting a cap on the maximum interest rate, you’ve just put a cap on the highest risk that companies will take on – you’ve basically taken the ability to buy on credit away from some people.

      • ihatephonecompanies says:

        Maybe the ones who can’t get credit shouldn’t have credit.

        • TouchMyMonkey says:


        • huadpe says:

          The thing is, when you put a restraint on trade like that, you end up with black/grey market lending like pawnshops and the mob.

          Someone willing to borrow at 30% usually really, REALLY wants to borrow the money. If they can’t borrow it through Capital One or whoever, they’ll keep looking until they find someone who will make the loan, often on even worse terms.

      • frank64 says:

        Many of the people who got the rates to 30% didn’t deserve it. They were told it was due to market conditions. My bank raised mine to 17% from 9% and I opted out and it is now closed. My other card I kept because they did not raise it.

        Although, there was absolutely no excuse for the 30%, the real thing that was unfair and deserved government interference was the radioactivity of it all. If it the increase is for future charges than I think they should the sky is the limit, as long as I know what the rate is going to be, I can make my own choice. I think the banks may be pricing themselves out of the market, but I thought that before. Too many borrowers complain about unfair rates and then go ahead and charge for that big screen TV and dinner. Whose fault is that?

        • hansolo247 says:

          Well, the interest rate you pay is both yours and the bank’s decision.

          You decided it was acceptable when you accepted the terms. The bank…well they can do what they want after that.

    • voogru says:

      There already is a cap I think, it’s like 30%.

      If you cap it to 10%/20% they’ll just close up shop and then people that need those short term loans can go pay a visit to their friendly loanshark…

      • alSeen says:

        The caps are based on the state the company is based in. South Dakota has no usury limit. We have lots of credit card companies based in this state also.

    • smo0 says:

      Nope… you still choose to do business with them… the only thing that applies to interest rates from the CARD ACT is upping them based on soft pulls of your credit report… outside of that, if they raise their interest rates across the board for.. well we’ll say “the cost of doing business,” they are in their right to do so.

      I agree with the first poster…… it’s time for people to get out of credit cards… or use them and pay them off before the interest rate applies to you.

      Credit cards start and end with the consumer, the inbetween stuff is the company.

  4. peebozi says:

    can’t a loanshark make a living without all of this negative publicity?!?!

  5. Duke_Newcombe-Making children and adults as fat as pigs says:

    Credit Card Interest Rates Hit 9-Year High. Thanks, greedy-assed, conniving, freeloading Banking/Credit Card issuers!

    There. Fixed that for you.

    • Traveshamockery says:

      How dare they make a profit!

      You do know that nobody’s making you use a credit card…right?

      • IThinkThereforeIAm says:

        I guess you’re right that they need to make a profit.
        However the explanation of this (“we’ll have to recoup our lost revenue from the late/overdraft/etc fees”) is kind of shady: those fees should NOT count as income, since they are NOT truly derived from the original business of banks. As far as I know, the true income generating business of a bank is make money off interest on loans it provides. Which is fine with me. But calling the penalties income or profit? It’s the perversion of the whole concept.

        • Traveshamockery says:

          So they can’t call the money they make from fees “income” or “profit”. What do you think they should do with it? Throw it out the window?

          • IThinkThereforeIAm says:

            They can call it whatever they want, however they should not base their business model to live (=profit) from those.
            Maybe if banks would stick to what they were originally created for, they would/could stop charging for everything they do with your money:
            – accept it -> ka-ching
            – hold it -> ka-ching
            – give it back -> ka-ching
            – let you know how much of it they are holding -> ka-ching

      • ScottCh says:

        If you think that credit card companies are only interested in making a fair profit from services rendered, you haven’t been reading consumerist for the last couple of years. As far as “No one’s forcing you to use one”, try shopping online, buying airline tickets, renting a car, or buying concert tickets without one.

        • HogwartsProfessor says:

          I bought airline tickets with my debit card. I know, I know, but I can’t get a credit card. Really didn’t have a choice.

          The only fee I had to pay that made me a little squirrel-eyed was a “September 11” fee. WTF?!

          • Verucalise (Est.February2008) says:

            ***HEAD EXPLODES***

            Now, Americans can pay for that day over… and over… and over…. sadly.

          • Conformist138 says:

            I… we… um… It’s overused and cliche, but, Only In America.

            I just googled that to make sure it was real. And… yeah. September 11th Security Fee on, at the very least, JetBlue. So… national tragedy turns air travel from a headache to a stroke-inducing nightmare with zero benefits for all the extra hassle and we get to pay both the government and the airlines for the privilege of enduring it.


        • hansolo247 says:

          I buy all that stuff with a credit card…

          the difference is I can pay for what I buy.

        • Griking says:

          As long as companies go public and are obligated to make profits for their shareholders year after year after year of course they’re going to be greedy. If you owned a large amount of stock in a company how would you feel if one day the CEO stood up and said “I think we make enough money now, there’s no need to be greedy, we don’t need to expand or grow any further”

          There would be riots and lawsuits galore.

      • bwcbwc says:

        Well, let’s see. Banks borrow money from the government at essentially 0% and lend it out at an average of 14+%…Is that really a fair margin?

  6. Dean says:

    CC companies will make their profits, and expand their claim to consumer finances. Its the only way that the capitalist financial system can continue to provide a market for consumer products in an ever-costlier environment for consumers.

    You want to “wean society off of credit cards”? Find a way to drastically lower consumer prices or the cost of consumption. But don’t expect for a second that our retail industry will quit pushing its wares or somehow become any weaker at doing so.

    • Traveshamockery says:

      If prices drop, people will just consume more.

      Accountability and responsibility are in short supply nowadays. That’s the real problem.

  7. chaesar says:

    is the picture from a Hugh Hefner pinball machine?

  8. Roy says:

    I don’t see how this is such a bad thing. I’d rather pay 2% more interest, if I were to carry a balance, then to have to deal with all kinds of weird extra extremely high fees.

    I say let’s regulate the airlines, because their fees are running out of control. (i.e. Delta started charging a 10$ booking fee per ticket)

    • craptastico says:

      keep in mind, interest rates are about as low as they’ve ever been. banks are able to borrow money from the gov’t for just about nothing, and the gov’t can borrow money for 30 years at 3.5%. mortgage rates are being touted as historically low. why in a low interest rate environment are cc rates so high? b/c they have the American public bent over a barrel

      • YOXIM says:

        This. A lot of people either forget about or don’t know about the banks ability to borrow money directly from the government at basically 0% interest. It’s how they paid back the TARP funds. Take the money out of one pocket, and put it into the other. Now that they no longer have any TARP money, they are no longer subject to the strict regulation and oversight that came with it.

        The banks have basically traded a donkey for a thoroughbred. Guess who got stuck with the donkey? (Hint: it’s not Shrek)

        • sullivanftw says:

          right, but you’re talking like access to credit is a right, not a privilege.

          people who want to borrow on the card issuers terms have to pay back the money on the card issuers terms. If they never entered the contract to begin with, it wouldn’t be such a big issue.

          What will come of this is what is supposed to happen in a free market–companies that issue credit cards to credit-worthy folks at decent rates will thrive and attract good customers. Other companies that have high rates will attract high risk creditors and, while they’ll have a lot more defaults, the high interest rates will help offset the losses.

          • Duke_Newcombe-Making children and adults as fat as pigs says:

            What this argument neglects is that there are many needs for credit beyond “‘cuz I lieks kewel stuff”. If you’re a business, for example, you depend on credit for surges in prices or to expand. Credit cards for travel and employee expenses. Independent contractors that eat costs of doing business before getting paid. The companies don’t care, they are in active collusion, and their minions in the House and Senate and their enablers.

  9. FrugalFreak says:

    No Credit cards=no 14.7%! If everyone discontinued using credit cards, guess if they would lower the rates?

  10. c!tizen says:

    Just wait, this is only the beginning. Banks are trying to stick it to the consumers to prove a point to the government about regulation. After fewer and fewer people use credit cards because of crap like this, the banks are eventually going to have to bend.

    There’s only a small percentage of consumers that can afford these intrest rates, and they’re not going to waste their money on cards with rates like that. They didn’t get as much money as they have by being stupid with it. Eventually the banks are going to realize that 5% to 10% APR spread across hundreds of millions of impulse buyers is better than 30% APR spread across a million or so conservative spenders with means other than credit. The first bank to do it is going to make… Bank.

    • Consumeristing says:

      The rates are reverting to its historical norms, nothing suprising. And I’m pretty sure these past 2 years have shown that banks don’t bend, taxpayers do.

  11. kouotsu says:

    I have never missed a payment and almost always paid higher than the minimum, and over the past 2 years or so my APR has gone from 13% to 24% to just last month raising to 29.99% :) You’re welcome Chase!

    • Jimmy37 says:

      Stop being a patsy for the CCCs. Don’t buy something if you don’t have the money for it right now. Even if you pay more than the minimum, as long as you keep a balance, every new buy is charged interest from the day you bought it. Use at least 2 cards. One to keep a balance, if you have to, and one to pay off each month to reduce your interest costs.

      • kouotsu says:

        Certainly can’t argue with that advice but as I am a student with a less-than-minimum-wage internship it is not always that easy. I will admit I have poor money management though so I’d rather not allow myself a second card lol.

        I think the answer for me is to just leave the card at home when I shop once I get it paid off again. I actually completely cleared the card’s bill about 2 months ago. Funny that they decided to reward me with ANOTHER rate hike. You’d think they’d try to give me some incentive to use it again!

    • Nigerian prince looking for business partner says:

      That’s a hell of a jump in rates. What is your overall revolving credit utilization? Do you have any non-CC derogatories?

      • kouotsu says:

        I have one credit card with a $900 limit I’ve never exceeded. I believe I have a medical bill in poor standing on my credit but nothing else as far as I know. In any case that mark was on my credit when I was originally approved for the card. I have in fact paid off some owed debt since I got the card so my credit should be better than it was!

  12. Jimmy37 says:

    I don’t care what my interest rate is. I pay my bill off every month. If I goof, it’s my fault.

  13. dbeahn says:

    At least with the high rates, you can see what it’s costing you.

    • Rectilinear Propagation says:

      Agreed. I can’t see how having most of the cost come from a billion different fees is preferable.

  14. Quake 'n' Shake says:

    The Law of Unintended Consequences strikes again! Mwahahahahahaha….

  15. baconsnake says:

    Funny, I thought there would be a lot of Anti-Card Act comments already, but I’m pleasantly surprised.

    I agree with most here that having rates that are clear and without hidden fees is a positive change. I am not surprised that rates are coming up in the short term, and what I expected. However, it will allow more clear competition over the long run when CC can compete for business using the up-front rates.

  16. JMILLER says:

    This is actually a good thing. Think of it this way. I buy a $5 item and it causes me an over limit fee, I pay $29 (if I am lucky). NOW, it is required that you opt in to that rip off. Instead if I buy that $5 item I can decline it, and even 30% interest on that $5 item for a whole year would cost me $1.50. Higher interest rates are a good thing for credit cards. I want higher interest rates and lower “fees”. I alos like that the CARD act locks in the interest rate as long as you pay. So if you gave me a teaser rate of 6.9%, the bank must honor that rate for all purchases outstanding instead of half way through paying it off asking you to double your interest payment.
    Imagine if car or home financing worked like credit cards used to. Your monthly payment was $300 on your car, but because we aren’t going to make enough money on you because you are paying early and on time, we need to jack up the rate to make your car payment $600 a month.

    • hansolo247 says:

      But when you buy a car, you agree to a fixed rate.

      When you buy a soda on a credit card, you agree to whatever rate the issuer chooses.

      THAT is the difference, and that was always disclosed (if you read the terms).

      We are a nation of dependents, and that is the problem.

    • Conformist138 says:

      Just for fun: You would pay $1.75 on that $5.00 if it was left for a year with an APR of 30%. Yes, 30% of $5.00 is $1.50, but that’s not how the math works in real life.

      The APR is just divided by 12 to get the monthly rate (2.5% in this case). Then, with that 2.5% applied to each new balance, you pay interest on the interest, driving up the total you repay. In this case, the APR is 30%, but the effective interest works out to 35%.

      Not a problem for a small balance, but when trying to work it out for a larger purchase paid over a longer period, this difference can mean a big chunk of change out of our pockets and back to the lender and we never even notice it go.

  17. aaron8301 says:

    If you do a little math, the banks aren’t bilking credit card users for any more than they have been. As Ben said, they’re just raising rates to make up for all the hidden fees they can no longer charge you.

    The nice part about this is transparency. You can now see upfront in one figure how much your credit card is costing you, instead of trying to factor in interest, this fee, that fee, etc.

    So in the end, this IS a good thing. And if people still see it as a bad thing, then hopefully it will cause them to stop using the plastic, which is an even better thing!

  18. dolemite says:

    I think it’s funny how the rest of the country must adapt to lower wages/income, etc., but the big banks and credit card companies refuse to do so. “Ok, we were raking in the dough during the past 2 years when credit was free for everyone, but now our profits aren’t as high as we think they should be. So…we need to find ways to keep our insane profit margins up!

  19. Supes says:

    Nothing to see here.

    This is what credit cards do, offer temporary loans at higher interest rates. Not predatory when they’re upfront about the conditions and the costs. It’s the hidden items that make it predatory.

    No reason people can’t still keep credit cards and use them responsibly, no need to “wean” ourselves off of them or something. They serve a valuable uses in our economy. It’s about educating the consumer so they know how to use them properly.

  20. lidor7 says:

    Surprise…? Remove all the fees and deceptive practices that were making credit card companies lots of money, you think they’d just write it off as a loss and move on? If the industry as a whole suddenly loses 20% (I just made up that number btw) of what pretty amounts to pure profit, it adjust to fill the gap.

    And the two ways CC companies can/will make up for it is by either upping the interest rate (penalizing people who keep a balance, people probably already in debt) or charging merchants more per transaction (penalizing most consumers in general). Likely, the CARD act just eliminates the occasional “gotcha” moments and distributes the cost more evenly to everyone else.

    Don’t get me wrong — eliminating deceptive practices are generally a good thing, but don’t think the change happens for free.

    • frank64 says:

      Some will try, some will try to do well with the new rules. It really depends on how us consumers react. I, and many here are not going to put up with it. I am working on being debt free(it will take a year) but I closed any card that tried to raise my rates.

      Banks profits can be very high even with the new rules. They just won’t be as high as they were. They are going to have to live with it.

  21. alternety says:

    In addition to a single payer health care system to wipe out health insurers, how about a single issuer debit card. Loss covered and if you don’t have money it does not work. If you need a loan, go to a much reduced banking system or for better rates the guy standing on the corner. And using the guy on the corner, defaults will be reduced as well (at least the second time).

    Famous last words, but what the hell – how can it get worse.

    We have fostered at least two gigantic industries who are only vampires on our economy and raise prices/costs for everyone.

  22. Zowzers says:

    Why do I have no problem with interest rates on credit cards being high?

    • BuyerOfGoods3 says:

      Probably because you’re smart enough not to own one.

      • hansolo247 says:

        I have no problem with it either.

        It all comes down to complying with contracts.

        The contract is one-sided, yes, but it is still a contract.

        ALL of our economic problems come from people not honoring contracts. Every. Single. One.

        AIG couldn’t meet its contract. Homebuyers couldn’t meet theirs. People in massive debt from buying crap can’t meet theirs.

        Our country went in the wrong direction in 2008. I’m not talking Democrat versus Republican…I’m talking Populist versus Libertarian. Elect a real Libertarian and the banking cartel won’t have its sugar daddy anymore.

  23. fsnuffer says:

    Don’t worry. Barack will give another speech to deal with the problem.

  24. llcooljabe says:

    “…issuers now have to push their profit-taking to the fore.”

    Those bastards, in business for profit and not the goodness of their hearts!

  25. IThinkThereforeIAm says:

    I’d wager that the famous and oft remarked upon Free Market Economy will take care of that. As long as we don’t allow ALL the banks to merge into a giant, customer-gutting conglomerate, they will lower the rates just to take customers away from each other.
    Temporarily this sucks (for those who carry balances) though.

  26. MaxH42 thinks RecordStoreToughGuy got a raw deal says:

    First, Ticketmaster rolls its fees into its prices, now the credit card issuers roll theirs into their rates…next stop, “one-price” airfares! Who’s with me? W000000000000000T!!!!!!

  27. rhys1882 says:

    Um, this is a good thing people. The costs of using a credit card should be upfront – not buried in random fees that only the financially savvy can navigate.

    Increasing interest rates is the only real way to deter your average non-sophisticated user from going overboard with them.

    The interest rate on some of my cards has definitely gone up. But I still have other cards that have pretty reasonable rates. Guess which ones I will be using?

  28. nygenxer says:

    Ridiculous interest rates is one of the things that Elizabeth Warren will address should she made head of the new consumer protection bureau.

  29. paul says:

    ¿por que?

  30. rushevents says:

    I’ve kept quiet about this until now but – when will people learn? When you more heavily regulate an industry it gets more expensive and more painful to deal with.

    Airlines, meds, now credit cards and, coming soon to a Dr. near you… Healthcare.

    If you think medical care is expensive now, just wait until it’s free.

    • Duke_Newcombe-Making children and adults as fat as pigs says:

      Three false “conservative” talking points in one post. Well played, sir/ma’am.

  31. rbb says:

    My USAA card is still at a staggering 6% Good thing I don’t need to use it…

    • jeffbone says:

      Which USAA card is that? I’m looking at my current statement, and both purchases and cash advances are listed as 9.9% variable APR. My effective rate is 0.0% since I pay them off in full every month but I am a bit curious if I could move to a less expensive product if I did need to carry a balance.

      • rbb says:

        It’s a Gold MasterCard that I have had for 27+ years. It was once prime +0% now it is prime + 2.75% Those of us who do have it were grandfathered into the system and are not about to give it up :^)

  32. evnmorlo says:

    Since card companies can’t lend money under the rate of inflation like federally subsidized banks, 15% is actually pretty modest.

  33. jeffbone says:

    Discover card must really be hurting for business. We’ve been cardholders with them for 24 years, carried a balance off and on over that interval, and always paid on time.

    We just received a “special offer”: balance transfers at 27.99% with a 3% origination fee. Seriously, I think the local check-cashing places do better than that.

    I shudder to think what kind of deals they’re offering to their worst customers.

  34. Bkhuna says:

    This story can’t be true. The Dear Chosen Leader said he was going to fix the credit card industry and bring down the evil greedy capitalist pigs in charge.

    So no, I’m leaning on his all benevolent arms and refuse to believe this story.

    I did however buy a gallon of his kool-aide mixe which I charged on my credit card.

  35. dush says:

    Why can’t interest rates on savings accounts at those banks be that high??

  36. laughingweek says:

    The sad part is that I WISH my interest was as low as 14.7%!

  37. DarkAngel says:

    home equity loans should be considered in the issue like this one . I think