Credit Card Interest Rates

Credit Card Debt Relief Lawyer

Half-way through 2022, credit card rates are high and climbing higher.  Following a period of relative stability from 2009 to about 2015, thanks to President Obama’s pro-consumer Credit CARD Act, (Credit Card Accountability, Responsibility and Disclosure Act of 2009), rates began to rise significantly in 2015 and continued to climb until 2019 by approximately 20% (from 13.7% to 16.9%).  In 2020 the Federal Reserve lowered interest rates considerably in response to the economic upheaval that occurred at the beginning of the Pandemic.  As an experienced credit card debt relief lawyer from The Law Offices of Neil Crane explains, the combination of these rate fluctuations has caused the recent spike in interest rates. The general belief is that an end is nowhere in sight.  Additional increases are expected later this year, and rates will continue to rise as we cartwheel inevitably into recession.

Along with the increased interest rates comes an increase in payment delinquency rates.  According to a report based on Equifax data published by the New York Fed recently, in the first quarter of this year, the number of people who were unable to make their credit card payment hit an all-time high since 2015.  Perhaps not surprisingly, millennial borrowers, people aged between 18 and 29, caused the surge in the rate of overdue payments.  Indeed, a Senior Vice President of a microeconomic research group of the Federal Reserve Bank of New York indicated in a recent blog post that the upward trend in credit card delinquency rates is likely in part a reflection of the increase in the number of “younger borrowers in the credit card market.”  

Various theories abound as to the cause of spiking interest rates.  Some cite the flood of younger borrowers, others the volatility of the general financial market, while still others point to the so-called “free” rewards we receive just for utilizing our credit cards.  These include travel rewards, spending offers, and occasionally, cash sign-up bonuses.  Someone has to pay for all of those so-called rewards.  Guess who that might be.

Given the continual raises in credit card interest rates and the inevitable recession that lies ahead, financial experts pretty much across the board are recommending that consumers pay off, settle or discharge their high-interest unsecured debt as quickly as possible, as it could prove to be their economic undoing.

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