Credit-Card Penalty Rates Drop Just in Time for the Holidays

NEW YORK (MainStreet) -- Banks and credit-card companies are in a giving mood this holiday season, which means only that they'll put a little less coal in everyone's stocking.

Folks who fall behind in credit-card payments face an average penalty rate of 28.45%, according to a CreditCards.com survey of 100 U.S. credit cards. The good news is that the penalty is down slightly from a 28.60% APR in 2012. For those fortunate enough to be blissfully unaware, penalty rates are the ridiculous APRs a bank charges a cardholder for making a big mistake. Typically, cardholder have to be 60 days or more late with a payment for those rates to kick in.

Watch the video below for holiday shopping tips that will keep your credit score in tact:

If you're a cardholder whose finances rely heavily on revolving credit and the balance it allows you to carry, those penalty rates can be substantial. If you're carrying a $4,000 balance on a card charging 11.82% -- the average rate for those carrying a balance, according to the Federal Reserve -- a boost up to the 28.45% percent average penalty rate would cost an extra $665.20 in interest alone each year.

Continue Reading on MainStreet

More from Personal Finance

When Is the FAFSA Deadline and What Are the Application Requirements?

When Is the FAFSA Deadline and What Are the Application Requirements?

This Should Be Your Retirement Savings Plan When the Stock Market Crashes

This Should Be Your Retirement Savings Plan When the Stock Market Crashes

Former General Electric CEO Jack Welch Has 4 Tips to Getting a Promotion

Former General Electric CEO Jack Welch Has 4 Tips to Getting a Promotion

What Is Neymar's Net Worth?

What Is Neymar's Net Worth?

How to Make a Fortune Like Microsoft Billionaire Founder Bill Gates

How to Make a Fortune Like Microsoft Billionaire Founder Bill Gates