Why have the credit card companies raised interest rates so high?

Didn't President Obama just give them hundreds of millions of dollars in order to keep them in business?


What a slap in the face. I just read where a couple had been paying 350.00 a month towards a credit card debt and now have to pay over 900.00 a month.


What a slap in the face!|||Greed!|||This is the legislation that was passed to address this issue:





H.R. 627


Credit Cardholders鈥?Bill of Rights Act of 2009





The Credit Cardholders鈥?Bill of Rights Act institutes a number of new consumer protections for people using credit cards. The bill limits the circumstances under which credit card companies can increase interest rates and requires creditors to notify consumers of an increase in their interest rate at least 45 days before the increase takes effect. The legislation prohibits applying finance charges to card balances accrued in previous billing cycles and applying fees to interest accrued during the preceding billing period if an outstanding balance has been fully repaid. The Act also regulates how credit card companies can apply payments to balances held at different interest rates and restricts card fees.





Signed into Law: 05.22.2009


Senate: Yea-90, Nay-5


House: Yea-361, Nay-64





You might find this website useful.|||Because they know Obama or congress won't do anything about it. I remember during the election, when going over Obama's voting record, he voted NO to capping the interest rate on credit cards. He said that it was too "high". I remember part of the discussion was that it would overide existing state law caps. Well well, guess was folks. Guess they changed their mind, cause now this new reform bill did JUST THAT! What a bunch of phoneys!





So instead he created his own legislation that on the surface seems good because he called it a "reform". And it was, part of that reform was NOT capping the interest rate.





So once again Obama is a phoney. He said he didn't sign a bill before because it didn't cap interest rates low enough, then when he became president, he signed a bill the didn't cap it at all and by law, overides all the state reforms that do cap it.





In the new bill, there are all kinds of "reforms" where the credit card companies cant charge you fines or anything for being late, but instead forces them to regain these fees by doing the one thing in the bill that wasn't covered, raising your interest rates. So good news! You won't be charged late fees for being late anymore, instead your interest rate will sky rocket! WOOT! Suckers!





Bottom line, This is Obama and Congress's fault for their 2009 credit card reform bill.|||Credit card rates rise and fall according to several different factors.





The first variable is the RRR (Required Rate of Return) for the company that loaned the money. (A credit card balance is basically an unsecured loan.) In effect this is the minimum amount of profit necessary for the managers of the company to stay in that line of business.





The next variable is the cost of the capital used to fund the loan. (The bank had to get the money from somewhere.)





Now we need to add in an amount to account for inflation.





And finally, we have to add in an amount to compensate for the risk that the loan will not be repaid. This factor is the primary cause of the recent rate hikes. The last statistics I saw was that almost 10% of the outstanding credit card balances are at risk of default. As a result the credit card companies have to add an average of 10% to their interest rates just to break even in this regard.





Now to make things even worse - this risk of default is not spread equally among their customers. Even in today's economic climate a sizable percentage of credit card holders are maintaining low balances and have a very low risk of defualt. These customers know that they qualify for low interest rates and will simply pay off their balance and use a competitor's card if they are not rewarded with low interest rates.





Thus the banks cannot raise their interest rates and keep them as customers so they have to raise the rates even higher on their 'high rsk' customers.





The fact of the matter is that most of the people paying the high interest rates today probably should not have been approved for a credit card in the first place.





And another thing to consider is that I would be very upset if my tax money that went for the bank bailouts were used to subsidize some idiot who went out and went wild with thier credit cards and now has no idea how they are going to pay them off.|||Because they can. This was a direct result of those credit card "reforms" that the Dems pushed through with the usual emotional rhetoric...





The Dems said creditors were "evil" because they dared to assign rates based on actual risk ... Think about that. For any other company, when their expenses rise, they increase the price of their products to compensate. Credit Card companies cannot do this so they must set their prices based on a "worst-case" scenario.





...something to think about when you hear them now about health care "reform."|||Because congress moved to make a law restricting their rate and penalty charges of credit card copanies which will be implemented in (I believe) March. Basically banks are sticking it to people why they still can. This happens all the time where people take advantage of the situation while the law is on their side...it's like someone filling up their basement with liquor before prohibition went into effect.|||personally I haven't noticed but I've heard the stories. It's because they are greedy blood-sucking leeches.





I understand the risk concept but I would love to see proof of it in actuality. The truth is that the people who carry balances keep the credit card sector in business. The ones who pay their balance off every month are called "deadbeats" by the industry because they don't make any money off them. Therefore, the credit card industry has an interest (no pun intended) in making sure people who carry revolving balances continue to carry those balances.


http://rortybomb.wordpress.com/2009/05/2鈥?/a>





Chase's CEO made $11million last year. Of course, that's partly because he only took a salary of $1 million and apparently was really proud of that if you do a google search.


http://www.forbes.com/lists/2006/12/ZDFJ鈥?/a>|||Because there is nothing preventing them from doing so.





Most of the provisions of the Credit Card Accountability, Responsibility and Disclosure Act do not take effect until 2010. Even then, the provisions concerning interest rates are mostly notification provisions. Greed is the underlying reason for the actions of the credit card companies.|||I don't believe a word of what Obama says, I bet these liberals forced the banks to charge that much- Obama wants to destroy the banks! He wants a One World Bank- That way he can control everyones money! I think Obama wants to own us, and own our property- by destroying the dollar in America. Its what George Soro's has always wanted and he is always there supporting Obama and helping him ... Creepy!





The liberals are trying to destroy the banks- private Sector


The liberals are trying to destroy Insurance Co. - private Sector.


They are Anti-Capitalists- who will cause America to go into a Depression!





The liberals are trying to destroy big companies by taxing them more-


They are trying to destroy as much as they can so they get the control and the profits!|||There was not requirement attached to the money given to banks that they do anything with credit card interest rates. My suggestion to all is that you not carry a balance on your credit card. That needs to be a topic for a high school class.|||Because most US citizens are poor.Its risky to give loans to poor people, that麓s what the raised interest means.|||Because they LOVE to do the right thing and they do NOT cheat the American people! NEVER EVER EVER! In case someone missed it, that was sarcasm.|||Because they can. That's the basic answer. At least all of them except Chase has temporarily frozen any increases, but Chase's CEO just says no. I plan to move my checking account to another bank tomorrow.|||Usury is no longer a sin to the Christian Right.





In fact, it is a *right* to them.|||Because they can. Obama just gave them millions of dollars of our tax money but we still have to pay our credit cards? BULLSH!T|||Congress stopped them charging higher rates for dead beats, so now we all pay.|||Did you really think banks wouldn't pass their losses to account holders?|||Because they can.|||Because they can.|||Because the Democrats have driven our dollar's value so low.|||to make money