Tuesday, July 29, 2008

Are Banks Raising Credit Card Rates to Shore Up Their Finances?


There is little doubt that over the past couple of years many banks have been hiking up the fees and charges on their credit card products, and people that are not as financially savvy as others have been left to pay the price. It seems that over recent months the situation may have become worse, with credit card providers flocking to increase the fees and charges on many credit cards.

Banks have certainly been feeling the pressure over recent months, with the global credit crunch causing huge problems when it comes to shoring up their finances, and it seems that one of the ways in which they have decided to do this is through increasing the rates and fees on their credit cards, as well as increasing rates on mortgages and loans.

People are urged to check the fees and charges on credit cards carefully in order to see what they will actually be paying, and in many cases card providers will not hike up the actual headline interest rate but will focus on the hidden charges such as cash transaction fees, annual fees, and the like.

One industry official from a credit card guide recently said: "It is nearly unprecedented to see so many providers raise their purchase rates over such a short period. Generally, hiking the purchase rate is considered a last resort for lenders, as they have to put this headline rate in their adverts. If they need extra cash, they will normally do other things, like increase the fees for transferring a debt from another card or for using the card at an ATM to withdraw cash."
With this in mind it is more important than ever now to really do your homework and compare credit cards before you make a commitment, as you could save yourself a fortune in terms of your borrowing costs. And remember, it is not just the actual APR that you need to look at but also the various fees and charges that are applied on the credit card.
By looking at the bigger picture and comparing a range of suitable credit cards from different providers you can get a much better idea of which card is both suitable for your needs and offers value.

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