Credit card rates could move lower with another fed rate cut
October 26, 2008 by admin
The FOMC meeting this week could add some needed relief for the average consumer. The negative news that has been flowing from news papers and media outlets have pushed the idea of a recession from a possibilty into a full blown reality.
Consumers who have credit cards that are directly tied into the prime rate should are likely to see an additional decline of 1/2 pt to their interest rates. The prime rate has dropped sharply in 2008 as the fed has moved to drop the fed funds rate to help unfreeze the credit markets, as the fed funds rate has declined lenders typically follow suit and lower the prime rate.
Not all consumers will benefit from the rate cut as card issuers often have floors tied into the rates they offer to consumers. This essentially means they reserve the right to have a limit to how low interest rates can move on their cards.
Lenders have pulled back sharply on the amount of offers they are now sending to consumers. The fallout in the credit markets has effected consumer loans, auto loans and credit cards as banks look to mitigate the risk in their credit portfolios.
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