With dozens of institutions such as MBNA, Capital One, and Providian issuing credit cards, why do we pay such a high rate for credit, 14% on average? Either our economics teachers got something wrong with the whole “prices fall in a competitive marketplace” lesson, or the credit industry plays by its own economic rules.
The high APR (annual percentage rate) on your card is one of the reasons why the credit card market does defy our Economics 101 assumptions about price competition in a competitive marketplace. If competition isn’t driving down revenues, rising interest rates just might.
For this complete story, please visit Rates Pinch Credit Card Issuers.
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