Interest rates are tumbling for US Treasuries, companies, and home-buyers. The prime rate is extremely low. Yet for some reason, credit card companies are charging more and more, with average rates hitting a nine-year high of 14.7% in the second quarter, the Wall Street Journal reports. Companies say they’re reacting to new regulations that prevent them from charging penalty fees and raising rates without warning customers.
The increases come seemingly without regard for the prime rate, which is supposed to be the cards’ benchmark. Right now, card rates are 11.45 percentage points higher than the prime rate, the biggest disparity in 22 years. “The rules have changed, and the goalposts have changed,” said the head of Citigroup’s card unit, blaming regulators for the hike. But the law's backers are unapologetic. "Better that consumers should know up-front what the interest rate is, even if it's higher," argued co-sponsor Rep. Carolyn Maloney, "than to be soaked by tricks and hidden fees."