brand larceny
Posted by Ben Berkon on February 22, 2010 01:25 PM
Nothing is better than a credit card – it’s easy to use, you don’t have to carry around cash, and you can pay off the bill later in the month when you’re still broke. As easy as it may be, it’s going to start costing customers a lot more.
Over the past five years, the annual percentage rate (APR) has been increasing at an alarming rate. The average APR now stands at 13.5 percent, whereas just one year ago, it sat at a comparatively light 11.8 percent. That’s small potatoes though. If you think it will drop back down anytime soon, you’re dead wrong.
"We're expecting APRs to average in the high teens by 2010 and expecting them to touch 20 percent and higher by 2011," said Anuj Shahani, director of competitive tracking for Synovate's financial services group.
It’s even worse for subprime cardholders since their rates are already in their mid-to-high 20’s. With the prime rates on the rise, it’s very possible that subprime rates will skyrocket to the unthinkable 30’s.
The raise in APR and subprime rates hasn’t deterred credit card companies from soliciting new customers though. If you start noticing a lot more credit card solicitations in your mailbox, it’s not because they like you – it’s because they’ve bumped their direct-mail solicitations up to 45 percent.
Though credit cards like American Express and Discover have done away with over-limit fees, don’t forget to read the fine print of the contract before signing the dotted line to a potentially debt-grappling adulthood.
Even with crippling recession and a supposedly new national attitude regarding living beyond our means (especially after the subprime crisis), are these credit card brands helping us, hurting us, or just doing business the way capitalism dictates?
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