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Credit card interest rates rising, probably not going down

Despite past cuts to interest rates by the Federal Reserve, credit card companies have had a history of raising annual percentage rates for years. While the rates don't go down when the Fed lowers its numbers, APRs usually do go up when the Fed raises rates as it did last December.

One thing people are noticing is that rates are often high across the board. Even individuals with stellar credit scores that used to command rates in the low teens -- or at least in the teens -- are now seeing rates in the low 20s on new accounts. When those account holders call to negotiate a lower rate, they are met with few answers and usually no willingness to budge on the part of the credit card company.

Some experts speculate that the rise in rates is part of the balancing act performed by credit card companies to keep profits high. This could be true following the credit card reform laws that regulated fees and other charges. Annual percentage rates, however, doesn't have a legal max, and one company even notoriously offered a card with a 79.99 percent APR.

One group of people being impacted by this rise in rates is millennials. They often have large student loan debts and little to no credit history, so they wouldn't be qualifying for the lowest rates. With rates ranging from 15 percent to over 25 percent on average, millennials are often receiving card approvals with APRs in the mid 20s.

One report notes that millennials, who grew up during the financial crisis of the last decade, are often eschewing credit cards altogether. Such rate hikes will likely only increase that. For others who are dealing with credit card debt and impossible interest rates, eschewing cards might be a good idea. If you can't get out of the card cycle, learning more about your options from a bankruptcy lawyer may be a good idea.

Source: Newsweek, "How credit card companies prey on millennials," Leah McGrath Goodman, Aug. 18, 2016

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