Ireland Needs Answers
Like England, Ireland is suffering from the credit crunch and high rates on credit cards. The interest rate is causing further issues with the lack of funds to cover the rising inflation. A research study was completed on credit card companies to see who is raising their rates and who might be offering the best rates.
Since April it is seen that American Express, MBNA, and most of the banks in Ireland have raised their rates. In fact some of the credit card companies have raised their rates by 3 percent in the last three months. So a person with a deal at 15.9 percent is now paying 18.9 percent.
Usually for the banks raising the interest rates on purchases is a last resort, but many feel they need to take this action. They are suffering from too many defaulted credit cards as well as defaulted mortgages. To combat one with the other is a dangerous game to be playing for the Irish consumer. They are already using their cards for spending sprees in the crisis based mostly on panic. The rate hikes are not just on the purchase rate either. The balance transfers and cash withdrawals are increasing just as much.
Banks are short on money and they need to increase their profit margins in order to get back on track. Unfortunately raising rates is not the way to go about it. Sure some consumers may see a decreased rate as a target to spend more and therefore eventually default. However, most consumers realise that a lower rate is a way to pay off a card. By continually paying on the card rather than defaulting, the banks would actually make more. They are creating their own situation to have more defaults from consumers by raising rates.
It does seem that some of the banks have realised this very thing. A couple of companies like Capital One have actually lowered their rates in order to reduce their chances of bad debt. Halifax is another company that has changed their interest rates for the better. They are offering a zero percent offer in order to encourage consumers to pay their debts off in the next 12 months.
Capital One is by far the best at the moment though. They are offering no balance transfer fee to their consumers to get them to switch cards. They also have the longest lasting balance transfer deal. There are terms and conditions that must be met, but the good news is the cards are there for those who need them.
It is no longer about the rewards for those in debt. It is about finding the best interest rate to keep a float on the next several months. The experts are hoping that consumers will compare credit card offers and switch to the better offers. When the deals are over on the cards the rates do increase, but by then most consumers should have their debt paid off and be ready to use their cards only for emergency situations.
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