Beware - There are Some Very High Credit Card Interest Rates Out There

If you have a credit card from Bank of America, perhaps you might consider the possibility that your credit card choice wasn't a very good one. For some time now, Bank of America has been applying very high credit card interest rates on the balances on many cards where the holder happens to have been late with a payment.

The good part is, Bank of America isn't doing this as a matter of standard policy. They are only charging such high credit card interest rates as a matter of penalty for people who seem a bit incorrigible in their credit card payment behavior. They consider imposing these interest rates on a case-by-case basis. And of course, if you happen to be unlucky enough to have been chosen, you get a six-week period of notice in which you can get your act together. And even once you are hit with these high credit card interest rates, you can be sure that your account will be reviewed once every six months (that's what the law requires) to see if you have adequately reined yourself in. If you have, they will consider you for your old low-end interest rate. That's a good thing about the new CARD Act - before the act came to be, if you were ever bumped up to a higher rate of interest, it happened to be a one-way deal. You could never come back.

The other good thing to come out of the act has been how they can't increase your credit card interest rates for any balance you've racked up already. They need to first give you your six-week notice period; and then, they are only allowed to hike your interest rate for any new balances you run up. This wasn't how it used to be before the act came out. They could raise your credit card interest rates on existing balances - changing the rules in the middle of the game, as it were.

For some reason, the credit card companies have been really late in bringing a little fairness into their dealings with their customers. With other kinds of financial transactions, you’ve had these fairness provisions in place for at least 20 years. But even with all the fairness measures in place, credit card penalty interest rates still to rise - unrelentingly. The credit card companies don't really have anything to worry about. They don't lose revenue when they turn fair.

And anyway, Bank of America and its 30% penalty rate is actually among the fairer ones in the business. Get an HSBC credit card and you pay 32%.