Credit card holders whose rates were increased in recent years due to economic uncertainty could soon see rate reductions as credit card reform takes effect.
According to an AP report published in the Reno Gazette-Journal on March 26, Bank of America revealed that it intends to "reduce the rate on about one million of its cards."
Millions of credit cards affected
Those one million cards represent about 2 percent of the bank's current credit accounts. The AP report indicates that if other major banks make similar rate cuts, over 10 million consumers holding MasterCard, Visa, American Express and Discover branded cards could soon see rate reductions.
The average consumer credit card rate is currently 16.8 percent, according to IndexCreditCards.com. This rate has remained essentially constant for the past year after rising one to two points in the previous two years.
Credit card reform requires banks to review increases
Credit card reform does not require banks to cut interest rates on revolving consumer credit. However, for rates that were increased due to economic and market conditions, the law requires banks to review these conditions every six months, and cut rates "when a reduction is indicated."
For consumers carrying a balance, a rate cut probably won't change their minimum required payment, but it can significantly reduce the time it will take to pay off the balance owed. Credit card statements are required to show this information in detail. Consumers receiving a rate cut can compare statements before and after the cut to see the effects on their payoff schedule.