Is there a legal limit for how high a credit card company can raise their annual percentage rate?
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M$2 Answers
Personally, I would think that rates should be based against something like the Federal Reserve Overnight Rate or the Prime Rate – that way the margins of a credit card company are not eliminated in a high interest rate environment. Along those lines, I think something like Prime + 15% or around there seems more than adequate for a company to make money even on high risk customers. If a credit card company feels like even that much interest isn’t worth it, I think they should just not be offering the credit in the first place.
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M$
Among the states that have shown leniency towards usurious lending lending rates are South Dakota and Delaware. In my opinion, recent legislation that has been passed is sorely lacking in the sense that it only delves on credit card fees and not on imposing a cap on interest rates.
In the current scenario, "it's so important to make timely payments, even if it is just the required minimum payment. Besides avoiding late charges, you keep your payment history intact and avoid giving your credit card company an excuse to raise your interest rate."
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M$
