Chase and Bank of America Opt for Variable Interest Rates
| July 15, 2009 |
When it comes to choosing a low interest credit card, does whether it have a fixed or variable interest rate make a difference? If so, you will have fewer choices of fixed rate credit cards as JP Morgan (Chase) and Bank of America have opted to change many of their credit card options to variable rates. The reason for the switch, changing cost and U.S. curbs on pricing from the Credit Card Accountability, Responsibility and Disclosure (CARD) Act being signed into law earlier this year.
For Chase, the largest credit card issuer among U.S. banks, changes are due to increased cost of funding credit card loans. Bank of America stated that they took in consideration the implementation of legislative and regulatory changes from the CARD Act, which to Bank of America will limit their ability to re-price cards based on changes in economic conditions and risk of cardholders. Both have stated that the variable rate will be based off the prime rate.
So when will these new variable rates take effect? Bank of America looks to start their new rate structure in August. Although I don’t know the exact date for Chase cardholders it is said that they received forty five day notices earlier in the year, so the change should occur very soon if it has not occurred already.
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The Credit Card Act is suppose to help us, but I think we as consumers are going to pay one way or another. We may get new rights, but the availability of credit and the attractive features of the cards (Low APRs, Rewards, Etc.) will decline.
Comment by Scott in USA — July 15, 2009 @ 11:46 pm