Keeping a clean credit rating may be a good idea after all, as interest rates are now playing around all-time high records, at an average rate of 14.72%. Rates could even go as high as 59.9% annual percentage rate, that is, if one has a really bad credit rating.
The interest rates are currently hovering on such skyrocketing figures because the CARD Act didn't help at all in capping the interest rates themselves, even if it stopped some hidden fees, prevented banks from raising interest rates and required them to disclose as to why they are lending at such exorbitant figures. In short, there is still no limit on the rates banks can charge new customers.
Card issuers know that they can't raise the rates once customers are issued a card, so they have to raise rates upfront to ensure revenues from that interest. According to the weekly data of CreditCards.com, annual percentage rates have surged more than 20% within the past two years. The rates even hit an average 14.78% in November last year, an all-time high record.
To the average American consumer with a bad credit score, this means that opening a credit card account is going to be horrible, if a person even qualifies for a card issuance. Interest rates depend on the card being applied for, but for those with below 599, they are most likely going to face a painful annual percentage rate of 24% or higher.
And there's no end in this problem. Though there have been legislative proposals to cap interest rates at a reasonable limit, none have been passed into law yet.