Credit Card APRs Lowered
Well, maybe there is a hint of good news coming from our current credit malaise after all. Creditcards.com has reported that APRs (annual percentage rates) is lower this week compared to last week, in response to the Fed’s lowering of interest rates. APRs are usually tied directly to the prime rate which is the rate banks charge each other for lending money.
All credit card types including business, balance transfer, cash back and student credit card interest rates have ticked slightly lower. Rates are still higher than they were 6 months ago. There is however, two notable exceptions – bad credit credit cards and student credit cards. Citibank led the way by reducing rates on their variable rate cards. I would expect other credit card issuers to follow in an attempt to attract new customers.
In related news Citi announced a third quarter loss while joining a chorus of other banks and credit card issuers in announcing an increase in defaults. This comes on the heels of a rather substantial decline in September retail sales was reported. This will no doubt further add pressure to the credit card companies bottom lines.
I think we all better buckle our proverbial seat belts. With the holiday season quickly approaching we will all, no doubt, be in for a bumpy ride. This may a Christmas season for the record books… and I don’t mean that in a good way.
Related Information:
- Issuers Raising Rates Ahead of Consumer Protections Find out how credit card issuers are rushing to raise credit card interest rates prior to reforms kicking in....
- Card Rates Rise While the Prime Rate Falls This article discusses the strange phenomenon of the prime rate going lower as credit card interest rates go higher....