Business Credit Card Rates

Monday, June 11, 2012 at 9:47pm by Site Administrator

Recent Trends in Credit Card Interest Rates

 

Similar to interest on personal credit cards, business credit card interest has fluctuated over the last few years. Interest rates and a variety of fees have gone up and down. Three years ago produced the lowest number of credit card offers in 15 years. Two years ago followed the trend keeping the number of offers low. Solicitations regained strength in 2011 resulting in more than 2.5 billion credit card offers sent to personal and business consumers. This year promises to be a banner year for marketing because of stiff competition among credit card companies.

 

Government Regulations Change How Credit Card Companies Do Business

New government regulations have forced credit card companies to rethink their strategy. Before the latest regulations, companies made a good profit from consumers and businesses considered high-risk consumers. There was virtually no limit on late fees and other credit card charges. No warning was required to raise interest rates and a credit card company had no obligation to inform the consumer what it cost to carry a balance.

 

Regulations Mandated by the Government

New regulations capped late fees at $25, companies cannot raise interest rates without warning and credit card statements reflect the actual interest cost of carrying a credit card balance. The result is a full scale marketing campaign aimed at people and businesses that maintain the best credit scores. Instead of relying mainly on various fees for profit, card companies target low risk consumers who spend more. Credit card companies carry little risk, but receive a merchant’s fee every time consumers swipe their card.

 

Interest Rate Trends Expected to Rise in 2012

Interest rates have crept up over the last few years. Two years ago, the estimated interest rate was 10%, two years ago, it reached almost 12% and now the average interest rate is close to 14.5%. Consumers can expect interest rates to continue to rise slowly and if the Federal Reserve raises interest rates, credit card companies will do the same. In order to be competitive, credit card companies are raising the bar on rewards, but conscientious consumers will notice that many card companies continue to raise interest rates to offset the reward expenditures.

 

What Low Risk Consumers Can Expect in Credit Card Rewards

Businesses and private citizens on the top rung of the FICO scoring system have probably seen a massive increase in credit card offers compared to the last few years. Some introductory zero interest rate credit card offers have expanded the repayment time from three to six months to as long as 12 to 24 months. Companies offer large rewards in an effort to entice users into signing up for a credit card. Users receive the bonus after meeting the required guidelines, which may require using the card one time or spending a specific amount of money using the card.

 

Additional Perks From the Credit Card Industry

The fee on interest-free balance transfer offers has fell from 5% to an average of 3%. Many consumers, especially businesses, are quick take advantage of the extended grace period. Some card companies that once required payment within 25 to 30 days have now extended repayment periods not due for 60 or even 90 days. The result of increasingly better rewards is often higher interest rates and annual fees. Credit card companies that waive fees for using credit cards abroad are especially attractive to international businesses.

 

Use Credit Card Strategy to Your Advantage

Now is a good time for consumers and businesses to take advantage of the big sign up bonuses. Diligently read the entire offer to determine if the rewards are worth the guidelines or restrictions. Expect high-end rewards to gravitate toward more requirements for the consumer to meet. It will not take credit card companies long to identify businesses and citizens that sign up for generous rewards and then never use the card again. Those who do can expect offers to gradually dwindle.

 

Interest Rates Expected to Remain Higher in the Coming Years

Credit card companies will pass the increased cost of doing business on to the consumer, and higher interest rates are one way of accomplishing that goal. The government prohibits credit card companies from raising interest rates for a year on new accounts. Some credit card companies circumvent the regulation by increasing the rate prior to issuing a credit card. As in years past, those with poor credit will see the highest interest rates and those with good credit will see the lowest rates.

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