Despite CARD Act, Credit Card Rates Stable

By Eileen AJ Connely, AP Personal Finance Writer

NEW YORK (AP) — Banks and some pundits had predicted that credit card users would face skyrocketing interest rates, a spike in annual fees and a plethora of other negatives after stringent new rules on cards kicked in last year.

But that's not what happened, according to a new look at the policies associated with credit cards issued by major banks and credit unions. The Pew Charitable Trusts Safe Credit Cards Project found instead that interest rates are steady with those charged last year, while most fees have dropped.

The stabilization of interest rates is key, because banks sharply raised rates in 2009 following the law's passage but before its implementation.

"Whatever increases in advertised interest rates we saw going into 2010 have not continued into 2011," said Nick Bourke, director of the Safe Credit Cards Project.

Median advertised interest rates for purchases on cards issued by banks are ranging from 12.99% to 20.99%, depending on a customer's credit history, according to the Pew study released Tuesday. Credit union rates increased slightly from last year to between 9.99% and 17%. Penalty interest rates charged to those who make late payments, and cash advance interest rates have also held steady.

One caveat the study doesn't address, however, is that most credit cards now carry variable rates, so if the prime rate starts to rise, that would lead to consumers paying higher rates on their cards.

After examining credit card offers made in January compared with those of prior years, Pew also found that transaction surcharges for cash advances, balance transfers and international purchases changed only slightly. The study reviewed offers from the 12 largest banks and 12 largest credit union card issuers. Together those institutions control more than 90% of the outstanding credit card debt in the country.

"Consumers are enjoying safer, more transparently priced credit cards — and banks and credit unions are able to compete on a more level playing field," Bourke said. The credit card regulations "created a new equilibrium where a number of policies the organization found "unfair or deceptive" a year ago have disappeared.