Credit Card Rates

Credit Card Rates Get Ugly

It is the season for credit card issuers to start cranking up the dials on card rates and fees. Watch your mail closely as most of the top issuers are revising penalty interest rates and fees for such things as late payments, over-limit situations, and cash advances.

Starting in April, Bank of America will charge you an interest rate of 29.49% (prime +23.99) if you miss two payments or go over the credit line twice in a twelve-month period. Bank of America is also raising the cash advance interest rate across the board to 21.49% (prime +15.99). Additionally, they will use the highest prime rate charged in the past three months as the basis for the monthly variable rate adjustment.

Chase is boosting its late fees for lower balances. Effective with the April billing cycle, the late fee will be $15 if the balance is below $250, and $39 if the balance is $250 or more. But if the default rate is in effect, then the $39 late fee applies regardless of the balance.

Discover will use three penalty interest rates for late payments or over-limits. Starting in April, any late payment will terminate all promotional APRs and trigger the rate to the standard rate or a rate as high as 16.49% (prime +10.99). If you make two late payments or go over the credit line twice within a twelve-month period, then the APR may go as high as prime +15.99%. If you make three late payments or go over the credit line three times within a twelve-month period, then the APR may go as high as prime +19.99%. Discover is also raising late fees for higher balances. The late fee for balances of $1,000 or more will increase from $35 to $39.

Citibank started increasing its late fee and cash advance fees this month for it's credit card holders. The late fee is now $15 for balances under $100, $29 for balances between $100 and $1000, and $39 for balances of $1,000 or more. Citi is also raising its balance transfer fee to 3% with a $5 minimum and $75 maximum and the cash advance APR to 20.49% (prime +14.99%) with a 19.99% minimum. (-- Reprinted with permission of CardWeb.com)

What does this mean for you? It means you need a plan to get out of debt as soon as possible, and to monitor your credit card accounts so you don't go over the limit or miss payments. Financial advice
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