Credit Card Interest
Rates
What do personal bankruptcies
have to do with bank card interest rates?
I'm Shirley Rooker for the Federal Trade Commission.
In an attempt to reduce credit card losses, several major banks are now
tying bank card interest rates to the credit records of applicants.
This means that if you have a sterling record, you'll get a better rate than
if you've missed a few payments or bounced checks in the past.
Banks are getting tough because delinquent payments and bankruptcies are
reaching record highs. In order to stem the losses, banks are now using your
credit history to determine the amount of interest you'll be charged on your
bank card, particularly important if you carry a balance from month to
month.
One major problem with this system is that it makes it difficult if you are
trying to shop for a card with the lowest possible interest rate since you
won't know what rate you're getting until the application has been
processed.
The best deal is a credit card that's available without an annual fee; or,
if you carry a fee, a card that offers low interest rates.
I'm Shirley Rooker, director of WTOP radio's Call For Action for the Federal
Trade Commission.
January
2002
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