RateAPY

Bad Credit Will Cost You More

Posted by: RateAPY Bank Rates News
May 11th, 2010

The Federal Reserve recently tightened regulations on credit card companies making it harder for them to raise interest rates. This has caused a back lash from the larger companies because it restricts how they manage bad credit risk. In the past, when a customer missed a payment, they could raise the interest rate in line with the risk of default. Since this is no longer as easy for the credit companies to do, they are switching to plan B.

Plan B could be anything from raising interest rates on all credit card customers to closing credit lines when a payment is missed. The final plan has not been revealed, and each company will likely manage their risks in a different manner. One thing is very likely, the customer with bad credit will pay more. Maintaining an excellent credit score has always been important. Now it is even more crucial.