While Some Interest Rates Go Down, Credit Card Rates Go Up
Why Are Credit Card Rates Taking a Hike?
We've enjoyed lowering interest rates lately. Want to buy a house? The low interest currently offered by mortgage companies can save you thousands. Need a car? Even those rates seem to be going down. Why then, as other rates go down, are credit card rates going up?
Robbing Peter to Pay Paul
Many financial institutions have faced a crisis lately. Those mortgage foreclosures you hear about lately have been putting strain on these financial industries and it seems they may be using credit card rates to make up for that loss. By increasing their finance charges, these banks may be hoping to make up for some of the mortgage losses.
What You Should Do
You may have to make a choice in the near future - either keep your cards and pay the higher rate if it increases, or close your account and pay it off at the old rate. The credit card companies who are increasing their rates are sending out notices to their customers and many of them are offering the option of paying the remaining balance off at the old rate if you close your card.
The Future Outlook
We don't know what direction the economy is going to take over the next few years. If you're carrying a lot of credit card debt, now is the time to pay it off. If you have a hard time managing your finances, getting some help may be in order. If we do encounter a serious recession, handling your money wisely is going to be critical and you definitely don't want to be paying off large balances at high credit card rates.