How Will Fed Rate Cut Affect Credit Card Holders?
In an attempt to head off a recession, the Federal Reserve has slashed interest rates again. Like most decisions, this is good for some people and bad for others. In particular, consumers who carry a credit card balance might get to breathe a sigh of relief. Then again, they might not.
Says CNN Finance Editor Gerri Willis: “Credit card companies tend to move their rates on their variable rate credit cards in line with the prime rate of interest, but they don’t have to. You might want to keep an eye on that.”
The bottom line is that accounts with variable interest, including most credit cards, can decrease their interest rates at the creditor’s discretion. This, at least, gives credit card holders a bit of hope when compared to other types of accounts. For example, consumers with fixed-rate loans aren’t going to benefit from this interest cut, and folks with a lot of money tied up in savings and other interest-yielding accounts will see their returns dwindle.
