Credit Card Interest Rates May be Capped at 16 Percent

House Rules Committee Chairman Louise M. Slaughter is reportedly working on legislation that would cap credit card interest rates at 16 percent.

While 16 percent certainly isn’t low, it’s markedly better than the 30 percent interest rates tied to many credit cards these days.

The bill, which is expected to be introduced after the Thanksgiving holiday, is essentially a response to credit card issuers raising rates to offset the effects of the Credit Cardholders’ Bill of Rights.

Those changes, which include the elimination of arbitrary interest rate increases, two-cycle billing, and negative payment hierarchy, are slated to be implemented in February.

But with every new regulation thrown the credit card issuers’ way comes a fresh strategy to make profit some other way, e.g. higher interest rates.

Back in May, an amendment to cap interest rates at 15 percent was shot down in the Senate, so it’s doubtful this measure will see much a different fate.

Regardless of whether interest rates are capped at some seemingly arbitrary number, it’s wise to avoid hefty finance charges by paying balances off in full or utilizing 0% APR credit cards.

If you’ve got a large balance and a relatively high interest rate, consider a balance transfer to a 0% APR credit card or a low fixed-rate credit card for the life of the balance.

Related Topics:

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2. Bank of America Raising Interest Rates on Credit Cards with Balances
3. Capital One to Lift Credit Card Interest Rates
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5. Is Credit Card Interest Deductible?