American Express (NYSE: AXP) and Capital One Financial Corp. (NYSE: COF) raised rates on two of their most popular cards before February 22, when the Credit Card Accountability, Responsibility and Disclosure (CARD) Act kicked in.
American Express bumped its average annual percentage rate (APR) on its Blue Card to start at 15.24 percent, up from 8.99 percent.
Capital One raised the starting annual percentage rate on its Platinum Prestige card to 11.9 percent from 7.15 percent.
According to the CARD act, credit card issuers cannot raise interest rates on a customer’s card within the first year. After that time period companies must give a 45 day notice on any rate changes.
The legislation also dictates that credit card companies must apply customer payments to balance with higher interest rates first.
Credit card issuers base their APR on the prime rate, plus a specific rate added on. The prime rate has been sitting near all-time lows of 3.25 percent. However, rates on a large number of credit cards have risen in the past few months as issuers look to hedge the perceived decline in revenue they believe the new laws will cause.
