Whether you’re trying to boost your credit score or earn rewards for your everyday purchases, credit cards can help settle your finances. However, that little plastic card may be costing you more than you realize. A recent CardHub survey reports that the average bank credit card has a monthly interest charge of up to 21%, which equates to a rate increase of 2.12% each year. This figure represents the average rate, meaning that the interest rate for that card you carry around in your wallet could potentially be higher.
Misleading Introductory Rates?
Most consumers are more focused on introductory rates and don’t pay much attention to what happens after the introductory period is over. Credit card companies are fully aware of this and their strategy is to draw you in with a 0% introductory interest rate. After you’ve been lured in with that irresistible rate and the honeymoon (introductory) period is over, the rate can go up to 21% or higher. Additionally, the high interest rate applies to the balance you carry if it wasn’t paid off and interest begins to build.
Other Fees Also Increase
Interest rates aren’t the only way that big-name banks make their money off of consumers. Other credit fees across the board are increasing as well according to the CardHub report. The average cash advance fee increased more than 10% in the first quarter of 2014, rising to $12.31 according to CardHub. Credit card companies know that consumers don’t typically take these costs into consideration when comparison-shopping for credit cards, which is all the more reason for them to increase fees as they see fit.
Break Away From High Interest Rates & Fees
The most logical solution for avoiding outrageous interest rates and fees is to select a credit card from your local credit union. Unlike many bank credit cards, credit union card rates are capped at 18% and other fees are comparatively low. Most credit unions offer a wide range of credit cards. Stop by our credit union in Brownsville today to find the right one for you.