According to the Federal Reserve, the average interest rate being charged on a credit card is 20.92%.
A Forbes analysis had the number at 24%.
According to Government Statistics, the total amount of credit card debt is now over 1.3 trillion dollars. This is like a financial time bomb waiting to go off.
Over the past few years, these two numbers have been going in the wrong direction. As the government has increased interest rates, credit card companies are set to benefit from those rate increases, affording them the ability to raise rates on their credit lines extended to consumers.
To make it worse, statistics indicate that the consumer has been using credit cards to make ends meet.
Then, card companies like CitiBank are trying to entice people to consolidate their debt with the Citi Simplicity card. For 21 months, any balance you transfer over to Citi is 0% (of course, credit card companies are charging 3 to 5% on the balances transferred - so it isn't truly free) for 21 months. Most people not paying attention to the fine print say, "Just tell me where to sign up" - 21 months interest-free looks great on the outside.
At the end of that 21-month period, CitiBank declares a new interest rate based on creditworthiness. The interest rate is 18.99% - 29.74%.
Think twice before you sign up for deals like this. Most importantly, ask yourself a question:
Would you want to do business with a bank that sets up consumer traps?
Where are the politicians writing laws to protect the consumer? Oh, they are counting their campaign contributions... Harsh? Maybe... Before you judge that statement, ask yourself this one. What body of politicians turns the other way as credit card companies gauge the US consumer? This is not hard to correct. They just have to place a limit on rates. Pretty easy to correct that one.
The stakes are high, and average interest rates are above 20%. It is time to say no more to credit cards. Please be careful - credit card companies are not out to give good deals.
Visit the Prudent Money FAQ page to learn about how you can work with Bob as your Financial Advisor. Schedule a consultation today by emailing info@prudentmoney.com or calling our office at 972-386-0384 X 206
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