Interest rates on credit cards are nearing record highs, especially for consumers with bad credit history.
According to CNN, this trend is mostly due to the credit card issuers reacting to the restrictions imposed upon them by the CARD Act. Those whose credit scores fall below 599 may be facing APRs in excess of 24 percent. Even those with slightly better credit could be facing rates higher than 20 percent.
Consumers with who are trying to improve their bad credit history may be dismayed by this trend. Since one needs to use credit to improve credit history, high APRs may appear to trap bad credit borrowers in a catch-22.
Credit cards are still a valuable tool to boost credit credit scores, but there are many other ways to do so. Taking out an auto loan and repaying it can be just as powerful in improving one's bad credit history as applying for a credit card, and unlike credit card rates, car financing rates are currently nearing record lows. Consumers who are in the market for a new car can fill out an auto loan application to acquire an affordable new vehicle and simultaneously improve their credit score.