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Kim Butler

Partners for Prosperity, Inc.

City:Mt. Enterprise

State: TX

I have 20+ years of handling alternative investments in cash, growth and income for clients nationwide.  I strive to help my clients with all things financial in every way possible over the phone and the web.  I own an alpaca farm which I enjoy working during my downtime.  I also enjoy gardening, writing and reading books.  I also train other advisors on Prosperity Economics.

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Credit Card Interest Rates Stabilize

Credit card interest rates and fees appear to be stabilizing two years after the Credit Card Act of 2009 took effect

Credit card interest rates and fees appear to be stabilizing, though the number of banks charging annual fees has increased, according to a national study addressing fears that the Credit CARD Act of 2009 would foster new charges and higher interest rates in the long-term.

New research by the Pew Charitable Trusts Safe Credit Cards Projects found that median advertised interest rates for bank credit cards remained unchanged from 2010, according to a Pew press release. The amount charged for annual fees also remained unchanged.

“The Act created a new equilibrium where interest rates have flattened, penalty charges have declined and a number of practices deemed ‘unfair or deceptive’ have disappeared,” said Nick Bourke, director of Pew’s Safe Credit Cards Project. “Consumers are enjoying safer, more transparently priced credit cards – and banks and credit unions are able to compete on a more level playing field.”

Americans currently owe more than $796 billion in credit card debt, according to data released in early May by the Federal Reserve. Credit card use increased 2.9 percent in March, but has been on the decline for most of the Recession and slow recovery.

The Pew study examined all consumer credit cards offered online by the nation’s 12 largest banks and 12 largest credit union issuers, which control more than 90 percent of the nation’s outstanding credit card debt. Median interest rates advertised by these lenders held steady at 12.99 to 20.99 percent. Bank cash advance and penalty interest rates also remained unchanged from 2010 to 2011.

Since the enactment of the legislation, over-the-limit penalties are greatly reduced. The largest credit unions have eliminated them entirely, and 11 percent of banks now charge them, Pew said. Late fees continue to be widespread, but the cost of the fees has gone down due to a $25 limit on first-time late fees.

The number of banks charging annual fees has increased from 14 percent in 2010 to 21 percent in 2011, while the number of credit unions charging annual fees has held at 14 percent. The amount charged for annual fees held at a median of $59 for banks and $25 for credit unions. Forty percent of cards with annual fees included no-fee promotions for the first year.