People often mention to me that card rates are unusually high these days. I can't help but think at times that these folks are trapped in a delusion of having once lived in a never-never land of sorts. I never recall the national averages for credit cards being anything but high. It used to be that the average fixed low interest rate credit card had rates that hovered around 20 percent or so. If you were lucky you could find some offers well below that mark, and indeed you still can. A survey by the General Accounting Office in 2005 clearly stated that about 80% of the 6 largest card issuers customers had cards with less that 20% APR. So it appears that rates are not more historically high as in the past. However, this era we now have many cards that feature interest rates as high as 30 percent and fees as high as $39 a pop!

This concept and the current state of things reflects back to the early 80s when Risk Based Pricing was born"Risk Based Pricing" grew into it's own. This system generally permitted card companies to promote cards with lower basic costs and associated fees to cardholders that were not credit challenged while extending more fees to the less credit worthy cardholders to cover the difference. In any case, for various reasons including changes to a firm's inner dynamic to changes in policy, this system does change. A result of this is that people who are more credit worthy are left covering the shortcomings of this model when persons of less than perfect credit do not help to meet the profit expectations of the credit card company when they don't pay their due amounts. This leaves the credit worthy customers with low interest rate credit cards to foot the bill.

Generally, in accordance with the bankrate.com website, credit cards that contain low interest tend to be represented in what is called the Platinum Card National Rate Average"Platinum Card National Rate Average". Even though fixed rates have pretty much been stable as of late. Recently they did dip down to below 10 percent in early 06, but the variable platinum interest rate has jumped to over 13 percent from 11 percent since 05. Judging from simple interest rates alone, it would make simple sense to avoid variable platinum rate cards to begin with and just stick with fixed rate ones because at no time during the past several years was it any cheaper at all to have a variable rate card based on the National Averages.

It only makes sense the deciding differences would be perks that come included with most adjustable rate offers. It just seems obvious that it is a fact that credit card rewards are deserved for being charged too much interest in the first place.

By: Sam Donaldson

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