The Fed cut the federal
funds rate by one-fourth of a percent on Wednesday.The rate is now
2.00%, a decline of 3.25% since September 18, 2007. This keyinterest
rate has now declined seven times in seven months, but analysts
predict that this is probably the last rate cut in the foreseeable
future.
What impact have these cuts had on credit card
customers? If you carry abalance of $5,000 and your APR is decreased
3.25%, you will save $162.50 over the course of a year. "Variable
rate credit cards must reflect these decreases as they
occur.However, there are two factors that could prevent you from
fully benefiting from these rate cuts," says Bill Hardekopf, CEO of
LowCards.com.
"According to the Terms and Conditions of most
credit cards, issuers have the right to change their rates at any
time according to market conditions.This gives them the opportunity
to raise rates at any time. So your card could show an APR decrease
right now but then may be subject to an increasein the future. And
this can take place with very little notice.
"Secondly, your
card's APR may increase based on what an issuer perceives as
increased risk with your specific credit. It could be that you have
been late on a recent payment or exceeded your credit limit a couple
times in the last 12 months. Perhaps your credit score has declined
for some other reason. These are all factors that could cause your
APR to increase, in some cases, substantially."
There are
some definite tips for a consumer during these times of fluctuating
rates. "It is the consumer's responsibility to check the interest
rate and the credit limit on your credit cards. Check this every
month," says Hardekopf."Stay well below your credit limit so you
have room to make charges in case of emergency. If you see your APR
increasing and you have been a good customer, call your credit card
company, say you have some very attractive offers from competitors
and ask for your rate to be lowered."
A consumer can always
shop for a new credit card should their rates become too high on the
current card. "You are not married to your current credit card for
life. While it's not good to change cards on a regular basis, a
consumer should consider doing so if their rate is too high. If you
have a good credit score and a good payment history, but your rate
is currently over 12%, you need to look atother cards with a lower
rate."
CreditCredible.com
Compare Credit
Cards..And Credit
Related Information, Products And
Services |
|||||
|
| |||||
| |||||
