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Credit card rates higher because of rise of walmart rates

[Wednesday, December 15th, 2010]

An increase in the rates on the Discover card of Walmart has led to a rise in the average interest rates on new credit card offers, touching record highs during the week. The national average for annual percentage rates has hit 14.76 this week which is the highest mark touched since 2007. This also represents the 5th time when the interest rate on credit cards has been increased over the last 6 weeks. The change which drove the average interest rates upwards is the increase in APR of the Walmart Discover card where the annual interest rate went on to touch 22.9% for all the new credit card customers. The same card had interest rates ranging between 13.9 % – 22.9% for all the new customers on board.

This is the second major rise in interest rates in 2 weeks. Last week the Centennial Classic Card customers saw a jump of interest rates to 59.9%. The First Premier cards previously had interest ranges between 23.9 – 59.9%. Usually the average rate is calculated using the lower rate of a range. But with the lower end disappearing, the national average has jumped drastically. These rates are still in place. Many analysts feel that the increase interest rates on new credit card offers from major credit card issuers, during the current economic situation when unemployment is looming large is only increasing the chances of bills being unpaid. Part of the reason why the interest rates are being hiked on new credit card offers are because the Credit CARD Act places stern restrictions on increasing the interest rates of the current customers. Currently the card offers are more uniform for most customers.

The increasing interest rates also translate to greater cost for all the borrowers. This means borrowers are paying a lot more interest on their credit card debt than they would have paid for the interest rates existing at the beginning of the year, when the annual percent rate average across the country was only 12.97 percent. Credit card customers can expect higher interests to stay in the future too as the APRs will rise until a new balance is found. Some of the credit card issuers are discontinuing certain segments to ensure that they have safe portfolios. The increase in interest rates will most likely be seen where the customer segments are pertaining high risk, and also the products which have been impacted by the CARD Act.

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