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| Credit Card Politics |  A critical factor in the politics of personal debt management is the interest rate which is to be applied to your credit cards. All credit cards have an APR attached to them. Every month outstanding balances on credit cards are subjected to the APR, account holders collecting more debt on their credit cards because of the politics of credit card companies.
Credit card companies are a great contributor to credit card debts, it goes without saying that the lower the interest rates on your credit cards are then the less your debt will cost you.
Whilst it is true that interest rates on credit cards are set by the politics and policies of companies, it is the politics of government and the politics of the MPC especially that really dictates the politics of credit cards interest rates.
How politics influences credit cards rates
Interest rates on all types of borrowing in the UK are inextricably linked to the governing politics of the base interest rate. This is the interest rate applied by the Central Bank to funds issued to lenders. Government politics has demanded that the MPC (Monetary Policy Committee) and its politics are responsible for setting the base interest rate, since 1997. The MPC meets every month to review the economic data & politics that affect the UK base interest rate. UK politics as well as European politics and world politics play a role, eventually leading the MPC to a decision on whether to change the base rate.
Politics of the MPC directly influences credit cards companies and users. If the politics of the MPC is to increase the base interest rate, credit cards issuers tend to follow suit by hiking the cost of borrowing on their credit cards. Should the politics of the MPC be to lower the base rate, companies may very well lower their interest rates.
The politics of credit card companies
Normally, credit card companies do one thing - make a profit. It is the same with any business, and the politics of credit cards companies support this aim. Central to the politics of credit cards companies is where to gain profit from on their credit cards. The APR is one area that credit card companies focus on.
It must be noted that the politics of how much profit margin credit cards companies set on the APR is driven by risk. Credit card politics dictates that users who default on credit card payments or have a bad credit history are high risk. The politics of credit card companies is to penalize these types of users with high APRs on their credit cards. Conversely, politics decrees that users who pay off their credit cards without fail each month should take advantage of the best credit cards deals with low APRs.
Some users who have suffered in the past with credit problems may think that credit card politics is unfair. Nevertheless, the politics of the industry has shifted in the last decade or so. This situation has led to new credit card companies specializing in providing high risk credit card users with good solutions.
The politics that drive these specialist companies are similar to the politics of mainstream companies - both types of credit card companies want to make a profit. However, specialist credit card companies though aim their policies more towards helping their credit cards customers with poor credit records get back on their feet.
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