Surprise! Credit Card Rates Stabilized After New Law

Two years ago, banks warned the Credit Card Act would drive interest rates and other fees higher, but a new studysuggests this has not been the case.

Credit Card swipe
Credit Card swipe

Pew Health Group's Safe Credit Card Project found that the median advertised interest rates for purchases on bank credit cards unchanged from 2010. Meanwhile, bank cash advances and penalty rates held firm.

Additionally, the percentage of cards with annual fees held steady for credit unions, at 14 percent, and increased for banks, from 14 percent in 2010 to 21 percent in 2011. The amount charged for annual fees remained unchanged.

"Pew's research shows that predictions that the legislation would spark new charges and long-term interest rate growth have not materialized," said Nick Bourke, director the project, in a press release. "Whatever increases in advertised interest rates we saw going into 2010 have not continued into 2011."

Some banks had sharply raised interest rates in 2009 after the law was passed, but prior to its implementation.

Still, the study did not address the issue of variable fees, which are very common. If the prime rate starts to rise, consumers could wind up paying higher rates on their cards.

Pew's research looked at all the consumer credit cards offered online by the nation's 12 largest banks and 12 largest credit union issuers. Together these institutions account for more than 90 percent of the nation's outstanding credit card debt.

Pew's research also found that late payment penalties have fallen and "overlimit" penalty fees have become increasingly rare.

Median advertised interest rates for purchase on cards issued by banks ranged from about 12.99 percent to 20.99, depending on a customer's credit history, the study said.

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