Good News For Credit Card Debtors

Have you experienced a credit card interest rate hike since January 2009? If so, you could be one of millions of credit card debtors who are granted a lower interest rate in the coming months. The Federal Reserve reported that credit card interest rates rose from an average of 13.57 percent in 2008 to 14.31 percent in 2009.

Many credit card debtors mistakenly believed that this increase was due to the Credit Card Act but it was mostly due to the fact that some banks were trying to put in place rate hikes before the law went in effect. Now that the banks are required to review any rate increase they instituted since January 2009 some credit card debtors could see their interest rates go down.

Who qualifies?  Well it’s not exactly clear how one qualifies for a rate reduction; but those who have not paid their credit card debt on time probably won’t benefit. Bank of America has already announced that it will reduce the interest rates of about 1 million of its credit card debtors.

For those debtors the reduction will create a huge savings on the amount of interest they pay on their outstanding credit card debt.  For others, it’s important to reiterate that holding a balance on a credit card is not a great idea.  In many cases you will pay 2 or 3 times more than what you originally owed.  Avoid the credit card interest rate game by avoiding a balance in the first place.   Try to pay off your credit cards before interest is charged.  And if that is not possible, try to repay the debt in a few months not years.

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