Interest Rates on Credit Cards Remain Steady
Despite the Federal Reserve Bank’s attempts to make credit more affordable and steer us out of this financial quagmire that we find ourselves in, credit card interest rates have either remained steady or have increased. This is despite of the fact that rates have fallen in virtually every other area of credit.
Interest rates usually fall when the Fed lowers the Fed Funds Rate. That have done that repeatedly over the past few months to try to prime the market. But credit cards are an animal of a different stripe. many banks and credit card issuers set a ‘floor’ on how low the variable rates on credit cards can go. That ‘floor’ has been reached.
HSBC, Discover Card and Wells fargo admit to having a floor while Bank of America and American Express deny it. Chase and Citi would not comment on their interest rate policies. In essence, what the floor means is that cardholders with good credit will not see their rates fall below 10% and cardholders with bad credit won’t see rates beneath 20%.
Even when the Fed does cut its rates the credit card companies are always slow in passing those lower rates to their customers. But when the Fed raises rates you can bet the credit card companies follow suit at a rapid pace. Go figure. Credit card issuers pretty much play by their own rules. That is thanks in no small part to the efforts of lobbyists. They are very good at finding ethically-challenged politicians and greasing their campaign coffers.
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