Posted By thestatedtruth.com on August 23, 2010

One more reason that the average person on main street has no chance,  and that’s official!

Interest rates continue to drop for the U.S. Treasury, large companies and home buyers, but for most of the 381 million U.S. credit-card accounts borrowing rates have been flying to the upside at an alarming pace.

Amoung the reasons:  New credit-card rules that took effect Sunday limit banks’ ability to charge penalty fees. They come on top of rule changes earlier this year restricting issuers’ ability to adjust rates on the fly. Issuers have responded by pushing card rates to their highest level in nine years.

In the second quarter, the average interest rate on existing cards was 14.7%, up from 13.1% last year, according to research firm Synovate. That’s the highest rates since 2001.

Those figures look bad when measuring the gap between the prime rate—the benchmark against which card rates are set—and average credit-card rates. The current difference of 11.45 percentage points is the largest in at least 22 years, Synovate estimates.

The moves are driven by a number of forces. The Credit Card Accountability Responsibility and Disclosure Act of 2009 has given card issuers less flexibility to raise interest rates as they wish.   At the same time, issuers are still dealing with credit-card delinquencies that remain above historical levels.

Categories: Commentary, Economy, Interest Rates, Bonds, National News, Pensions and Retirement, Wall Street
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