Credit Card Interest Rates Are Highest in 20 Years - Be Careful!
Tell me what does not make sense here:
- Credit card agreements might be more abusive than ever.
- Interest rates as determined by the Fed are at generational lows.
- Credit cards are charging on average the highest interest rates in the last 20 years.
- Yet credit card balances are increasing at alarming rates!!
Why are consumers loading up on credit card debt with the highest rates in 20 years and maybe the most abusive terms and conditions ever? Lendingtree.com sent me a statistic that I knew had to be true I just had not come across it until today. CompareCards released its monthly credit card debt report that found the average credit card APR (interest rate) has increased to 15.54% — the highest in 20 years.
The marketing for credit cards make these cards look like a good deal full of benefits. Unfortunately, the devil is in the details. I think the most deceptive program is found with the Citi-Simplicity Card.
The marketing is appealing. No more late fees and no more annual fees. If life happens and you are late with a payment, who wouldn't like a "no more fee" benefit? So, if you signed up for this card you saw some advantages to that benefit. Now, let's look at the card member agreement for that card.
Default. We may require immediate payment of your total account balance, to the extent allowed by law, if any of the following occurs: (there was a list - however, just look at #1)
1. You don’t pay at least the Minimum Payment Due by the due date.
We may close or suspend your account if any of the events listed above occur, or for any reason, or for no reason. We may do this at any time, without notifying you, as allowed by law. If we close or suspend your Account, or if you close your Account, you must pay us all amounts you owe on the Account, even if they post to your Account after it’s closed or suspended.
So you take advantage of the no late fee benefit, you don't get a late payment. Yet, you could be considered in default, they close the account, they demand the balance get paid, and the best part.....they put you in collections and make you pay all of the legal fees. Yes, that is in the agreement as well. Will it happen? They would probably allow a few late pays slide. However, at some point you look like a risk. Just know, they have full control over you through that contract.
Remember the terms and the conditions which they readily publish is a one pager that tells you in general terms the rules of the card. The 18 to 20 page Cardmembers Agreement gives all of the painful details. Yet you don't get that sent to you until way after the fact. Of course it comes in the mail which most people don't pay attention.
Bottom line: Credit card companies are happy to issue you credit these days. They will also entice you with all of these "benefits." However, there is a price to pay when you dance with the devil!