Rate-Jacking: Risk-Based and Opportunistic Pricing in Credit Cards

Abstract:     
This Article, part of a theme-volume on the Credit C.A.R.D. Act, explores the phenomenon of credit card “rate-jacking” — the practice of card issuers suddenly raising the interest rate on an account, often applying the new rate retroactively to existing balances. This Article examines the degree to which rate-jacking — now largely prohibited by the Credit C.A.R.D. Act — and credit card pricing generally reflects risk-based or opportunistic pricing.

Number of Pages in PDF File: 30

Keywords: credit cards, Credit CARD Act, risk-based pricing, opportunistic pricing, shrouded pricing, double-cycle billing, residual interest, float, securitization, static pool, revolver, transactor

JEL Classification: K00, K12, K23

Accepted Paper Series