Why are credit card issuers raising rates?
Issuers are raising rates for two reasons: 1) to compensate for rising credit losses due to the economic downturn and 2) to establish rate changes – namely rate increases – now before the Credit CARD Act is fully implemented. Some issuers are raising rates now, but not because of the new law. It’s a shift to retain revenue. In actuality consumers will not pay more as a result of the law, but will instead be completely aware of the true pricing and fees at the beginning (which is causing rates to appear higher). In the pre-reform universe, invisible back-end pricing and fees ratcheted the cost up. Simply put, borrowers are being greeted by fees at the front door and not the back door… making how much they will pay clearer up front and enabling borrowers to choose the best rate. Explain the 45-day notice of a rate and fee hike. Credit card issuers must give customers 45 days (from the pre-law 15 days!) notice before changing interest rates & fees. This provision prevents card companies f
