Cedar Rapids Weather
Facing A Sharp Credit Card Interest Rate Increase?
CEDAR RAPIDS - Claire Hanson has spent a quarter century helping people straighten out their bottom line. She is the owner of Financial Counseling Center in Cedar Rapids.
With some people facing higher interest rates on credit cards, Hanson said she hears the desperation in her financial counseling office in Cedar Rapids. "It becomes a spiral," said Hanson. "A cycle. The timing is really out of sync." The new rates can be jolting for good customers, who have a history of paying on time. 22.85% from Wells Fargo. Up to 29.99% for new purchases from Citicard. The rate hikes go into place unless the customer closes the account. Then the remaining balance can still be paid off at the lower rate. While these terms are even in place for those with solid credit, Hanson also works with those who rely on their cards just to make budget each month. "We see a lot of people using their credit cards for groceries," said Hanson. "You have less money to pay. That only promotes the use of plastic." Why the rate increase now? In February, Congress is set to enact credit card reform. The result would freeze the card companies' ability to raise future rates. Rick Benhart from Collins Community Credit Union said this move is from the national credit card companies and not local banks or credit unions. "It's pay the freight or they'll get rid of you," Benhart said. He added that interest rate increases are an attempt to off-set the higher costs with the card companies as well as the expense of lower fees. Larry Helling, from the Cedar Rapids Bank & Trust, said these national banks are running into higher expenses, from credit card defaults and higher FDIC insurance costs. The common theme, from the bankers who spoke with KCRG-TV9 about the interest rate increases: read the fine print before coming to a decision and taking action. For Claire Hanson, helping her customers get out of a financial hole will become more difficult. "The people who can't afford it are the ones hurting the most," Hanson said. More Good Stuff |
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