Credit Card Interest Rates Credit Crunch

The Credit Crunch and all the economic disasters it brought with it touched all of our lives in late 2008 and is continuing to do so today. Governments have bailed out banks to the tune of countless billions of dollars and pounds and forced interest base rates down to virtually zero in an attempt to stimulate economic growth and rejuvenate shattered economies. The cost of mortgage and loan payments has consequently been significantly reduced and the poor savers on the other hand have seen their income from interest all but eliminated. Does anyone apart from me wonder, therefore, why credit card companies are continuing to be allowed to charge their exorbitant twenty and thirty percent plus interest rates?

As people are hit financially in very real terms by the economic circumstances resulting from the Credit Crunch, many more are failing to clear their credit card bills each month. This results in interest being charged where perhaps it was never charged before, at almost unbelievable rates, and the balance on the cards therefore rising in real terms. This means that people have more to pay back each month in times when they can ill afford to do so and therefore each month their outstanding balance will rise higher.

As respective Governments look to simulate the economies of their countries, one thing they will require is people to spend more in retail outlets of every description. This naturally means that people will have to have the necessary cash in order to do so. As their credit card balances grow, however, people are going to have less and less money available to spend in this fashion. What they are saving in mortgage payments will have to go towards paying off the exorbitant levels of interest charged on their credit cards.

As mortgage rates and savers’ rates are linked to the Government’s base rate, so too therefore I propose should be unsecured lending and specifically credit cards. Much of the blame for the Credit Crunch has been laid at the feet of the big banks and their irresponsible lending and speculative procedures. Why can no one who can do anything about it therefore see that these same banks are continuing to cream the customer by charging them totally unrealistic and unjustifiable levels of interest on their credit cards?

It is in all our interests – even the banks’ – that the Credit Crunch be brought to an end and economic growth stimulated at the earliest possible juncture of opportunity. By curbing the rates on these card balances, Governments could put more money in peoples’ pockets in very real terms and allow the spending which is so desperately required to take place. Alternatively, we are going to see a continued upward spiralling of debt and financial hardship and a Winter of economic depression that will stretch in to the Spring, the Summer and far, far beyond.