Credit Card Rates Reach a 9 Year High…
Andover, Massachusetts August 23rd , 2010 – The average interest rate on credit cards rose to a 9 year high last quarter eclipsing 14.7%. This is over 1.5% higher than in the same quarter a year ago and indicates that credit card companies continue to charge fees and interest rates to make up for lost revenue due to the economy and more government regulations.
This average rate hike was followed up by news that credit card spending in the last quarter was the second highest ever recorded, falling just short of the spending level reached in third quarter of 2008. While some may see this record spending as good news for the economy I believe that this is an indicator that Americans are having trouble meeting their obligations and thus are relying on credit cards to make ends meet. This can have disastrous consequences in the when many of these people will default on their obligations. As credit card usage dipped over the past 2 years the credit card companies have done everything possible to remain profitable. The increased interest rates were the easiest way to do this and it appears to be working as many of these companies are posting strong quarterly earnings and rosy forecasts for the immediate future. While this is great for shareholders it is not very good for the average consumer with thousands in credit card debt. It is making their life increasingly difficult as more and more of each monthly payment is going towards interest and not the principle balance. This means that they are paying more and staying in debt longer than ever, just what the credit card companies want to happen as an in debt consumer is the most profitable for them.
Readers, have you noticed your rates reaching new heights? Have you said enough is enough and paid off your cards and closed the accounts? Where do you see this trend heading over the next few years?
Preferred Financial Services is a debt reduction firm certified by the CFC (Center for Financial Certifications) and accredited by U.S.O.B.A. (United States Organizations for Bankruptcy Alternatives). Headquartered in Andover, Massachusetts, Preferred Financial Services has been a leader in the debt reduction industry since 2003. Preferred Financial Services has acquired some of the best experience in the industry over the past 7 years. In 2009 alone Preferred Financial Services reduced over $16.5 million worth of consumer debt for just $6.4 million, for a savings of about 60%- and over 2,900 accounts were settled on behalf of their clients.
For more information, please visit www.pfsdebtrelief.com or follow us on our blog at www.pfsdebtrelief.com/blog/ .
Contact:
Stephan Tavernini
Marketing Coordinator
Certified IAPDA Debt Arbitrator
Preferred Financial Services
