In order to successfully compare credit card interest rates, it helps the consumers to understand why banks raise credit rates and fees, and what they have to do with each other. One big example last year was when banks gained a big incentive when they sold their debts by raising card fees and increasing penalties, with securitization considered the major reason. If cardholders defaulted on their loans it mattered a little to the banks as they package them up and sell them off anyway. However, if the higher rates and fees bring the banks in more money before then – well, the banks get to profit first. From January of 2003 to December of 2007, there was a huge raise in card interest rates and fees up from 17% – in addition to those who charged beyond their cards’ limits up 23%.
It is known that when banks sells off the cards and doubles the interest cardholder’s rate without their knowledge, the bank keeps the majority of the profits – but very little of the account defaults. A person who can accurately compare its interest rates sees that most major cards make sure the low-income population usually approved but with higher interests tacked onto it by expanding their lending indiscriminately. Continue reading ‘Down Side to Comparing Credit Card Interest Rates’ »