Credit card interest rates keep moving higher

Credit card interest rates jumped slightly again this week, as banks continued to make it more and more costly for consumers to use their plastic.

Spurred by a rate hike by Bank of America, interest rates on new credit card offers reached 12.75 percent, according to the Weekly Credit Card Rate Report. That's the eighth increase in the past 12 weeks, and it represents an increase of more than three-quarters of a point from June and a point and a half since summer of 2008.

What does that jump mean to your wallet? Someone who borrowed $5,000 on a credit card today and consistently paid $150 per month at today's rate would have to pay $6,205 to pay off the debt. That's $86 more than would have been required in June.

However, experts say that this week's rate increase may not be dampening consumer spending as much as one might expect. That's because consumers have simply become used to sky-high interest rates, so Bank of America's APR increase on its NFL Extra Points Visa card, which prompted this week's national average increase, can simply be viewed as just more of the same.

"APRs have been high for a long time, so I don't really expect it to be much of a deterrent to card use" says Carter Malloy, a research analyst with Arkansas-based financial services firm Stephens Inc.'s weekly credit card rate survey is based on a sample of about 95 national credit cards, including the aforementioned NFL card. The sample is chosen to be representative of the most frequently used cards by both popularity and type. That sample is updated as cards come and go from the market, and as the popularity among different types of cards shift.

 Consumers keep on spending These interest hike hikes haven't deterred spending because consumers still need their credit cards and are still willing to use them regardless of their rates, Malloy says. With unemployment rising above 10 percent and with a general feeling of economic uncertainty still prevalent among American consumers, that need for funds trumps their worry over rising rates.

And rates have been rising. In August of 2008, just before the stock market collapsed and the recession's full grip took hold, interest rates stood at just 11.26. Since then, a combination of economic difficulty and increased regulation have driven Bank of America and virtually all other lenders to boost rates in a struggle to protect their profits.

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