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Bad news: credit card will register huge jumps in APR’s

By Faye Mergel
Published: Tuesday, November 23rd, 2010

03Bad news for new credit card owners: interest rates on newly offered credit cards in the market are now sky-rocketing. Just this week, a lot of credit card issuers have announced of their new rates and plans of increasing their interest rates. After the announcement by some lenders, Walmart also said that they are increasing the rates on their Walmart’s Discover credit cards. Reports say that credit card issuers as applying a rate which could be as high as 14.76 percent. This is considered to be the highest increase since the year 2007. This is the sixth increase just for the past six weeks.

While consumers are still trying to cope up with the slow recovery of the US economy, there is yet another burden passed onto them. A lot are trying to pay off their debts and this increase is truly a bad news. From 13.90 percent, the interest for Walmart’s Discover credit cards increased to 22.90 percent. There had been a lot of request for Walmart and its issuer, G.E. Money to give some feedback on the report but refused to talk.

This had been the second largest increase in interest rates for the past weeks. During the previous weeks, the card issuer First Premier started applying a new rate on their customers. Centennial Classic’s old APR was 23.9 percent and now jumped to as high as 59.9 percent. With the new rates being applied nowadays, the APR are now on the low ends. When you have to compute, the original 23.9 percent would be omitted though some credit authorities say that the old rates could still be effective.

With the explanation given by economic analysts, lenders tend to raise their rates to their new card applicants despite the increasing unemployment rates that led to a lot of unpaid bills. With the new rates set by issuers and lenders, it is an obvious indication of higher borrowing costs. As First Annapolis Consulting’s consultant, John Grund, he can compare the credit trend to be a shirt that can fit everyone. He too added that consumers should not be given false hopes about the rates going down in the coming days. Increase in rates will continue until there would be a stable supply and demand in the credit card industry.

While the nation and its citizens are still trying to recover from the economic crunch, the public is encouraged to practice wise spending habits.

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