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Now your credit is bailing out banks.(interest rates on bank credit cards)
While big banks are collecting billions of dollars in taxpayer bailout money, they are also getting what amounts to a second helping from consumers. The reason? Banks have been raising credit rates, and their markups have hit record territory.
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The Federal Reserve has repeatedly slashed interest rates in the past year, cutting borrowing costs for banks. Now the spread between the prime rate, a closely watched benchmark banks use to set loans, and the highest credit-card interest rates they charge to consumers has never been wider (see chart at right).
High-flying rates
In December, Federal Reserve cuts caused the prime rate to fall to 3.25 percent. Then JPMorgan Chase, the nation's second-largest card issuer and recipient of $25 billion in federal bailout money, jacked up the top rate it charges customers who are deemed risky for some reason. Its new top rate: prime plus up to 26.99 percent, capped at 29.99 percent. In January, Chase offered "easy steps" for such consumers to lower their rate, such as automatic deductions. That lowered the rate to 27.99 percent, after a year. Citibank, which ...
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