If you’ve ever been late with a credit card payment, then you’re quite familiar with credit card penalty rates. A recent CreditCards.com survey of 100 U.S. credit cards revealed the average credit card penalty rate dipped slightly from 28.60% to 28.45 in 2012.
Penalty rates can cost you a fortune. Says CreditCards.com, “…Consider a cardholder who carries a $4,000 balance on a card charging 11.82 percent–the average rate for those carrying a balance according to the Federal Reserve. At the 28.45 percent average penalty rate, the cardholder would have to pay an extra $665.20 in interest per year.”
The survey found that 60 out of the 100 cards in the survey have some kind of penalty interest rate.
Other findings:
- 28 cards had penalty annual percentage rates that were based on the prime rate plus a specific percent.
- 32 cards calculate cardholders’ penalty annual percentage rate based on their creditworthiness.
- Just 23 credit cards revealed penalty rate information in the terms and conditions section.
- Surprisingly, for 77 of the cards, follow-up phone calls or a close review of the cardholder agreement were necessary in order to get a confirmation of the details of a penalty rate.
Read the full report here.