The lowest credit card interest rates in the nation are coming to an end following a recent federal court decision that removed the Arkansas bank usury law. As a result, Pine Bluff-based Simmons First National Bank has jacked up interest rates this month for its VISA and MasterCard products from 7.00% to 8.95%. Under Arkansas usury laws, credit card issuers, based in the state, could not charge an interest rate exceeding five percentage points over the federal discount rate. With last week’s cut in the discount rate, Arkansas banks would have been limited to maximum annual interest rate of 6.5% for credit cards. Simmons noted in its recent earnings report it has been impacted by the rapid decrease in interest rates this year which forced the bank to lower its credit card rates to a level significantly below the market. Simmons said this has created a margin squeeze as charge-offs have been rising throughout this year. Simmons also added a 12.95% punitive interest rate for purchases and cash advances, as well as a 16.95% penalty APR for cash advances.

Punitive interest rates have been unheard of in Arkansas till this month. In mid-October, the 8th U.S. Circuit Court of Appeals in St. Louis upheld a previous U.S. District Court ruling that the Gramm-Leach-Bliley Financial Modernization Act of 1999 supersedes state constitutional limits. Other credit card issuers in Arkansas are expected to boost rates by year’s end. Simmons has 112,000 active accounts at the end of the third quarter according to CardData. For more information visit http://www.simmonsfirst.com.