Original article by Alexander Eichler of the Huffington Post
If one of your New Year’s resolutions is to pay off your credit card debt, be advised that it’s getting harder all the time. That’s because credit card interest rates climbed to record highs last month, reaching an average of 15.22 percent, according to the consumer information site CreditCards.com.
The rising rates reflect an ongoing push-and-pull between the people who use credit cards and the companies that distribute and collect on them. With the economy stuck in low gear, and with an increasing number of Americans working low-paying jobs that keep them living paycheck to paycheck, customers appear to be leaning on credit cards more and more.
In 2011, credit card users built up a collective $64 billion in debt — a sum much greater than in either of the two previous years, according to The Christian Science Monitor.
Yet even as Americans continue to swipe more plastic, credit card companies are still trying to attract greater numbers of users, reportedly hoping to make up for revenue lost in the aftermath of the financial crisis, when millions of people lost their jobs and were forced to cut back on spending.
In a bid to encourage further activity, credit card companies are increasingly relaxing their standards and targeting people with spotty credit records. Card companies sent 418 million mail offers to subprime borrowers in the first three quarters of 2011, according to The Wall Street Journal — more than twice as many solicitations in 2010.
Subprime borrowers are some of the people most vulnerable to higher interest rates, as they face more challenges digging their way out of debt. All Americans are vulnerable to some extent, however, especially if — as is the case for many people — they tend to underestimate how much debt they’re actually carrying at any given time.
Late payments were trending upward this past fall, according to reports from various credit card companies. They remain below the levels seen before the Great Recession, according to the Associated Press, though that may be because overall credit-card use is also down.
After peaking in mid-December, interest rates have since declined slightly, though they remain at historic highs. The most recent CreditCards.com report shows that average interest rates have come down to 15.14 percent as of December 27 — which is still markedly higher than six months ago, when average interest rates were at 14.84 percent.