With the Federal Reserve lowering interest rates today, I immediately said: Yes! That means my Nordstrom Visa Signature (link here) card will have a 4.5% interest rate (when Nordstrom re-rates my account in a couple of weeks). But then I recalled that Nordstrom also has a rate floor on my card -- meaning that at some point, my rate can go no lower. If you don't already know, you should check to see if your cards have a rate floor.
Nordstrom's rate floor is 4%. If things continue to stay awful here in the United States, and the Fed is forced to lower rates even farther, my Nordstrom card's interest rate will eventually stop going lower. For now, I welcome the 4.5% interest rate. (Since originally writing this story, Nordstrom has announced an interest rate hike that will apply to all of its customers (link here).)
But these rate floors are something to think about. Lower interest rates encourage more borrowing. But if your card has a rate floor, you'll eventually lose the incentive to borrow, even if the Fed took rates to 0% (don't think that can't happen).
I was going to write a full-blown story on the topic, but I see that Mainstreet.com has written a story on it today. As a result, it will be easier to simply read that story instead. Though the story looks at today's rate cut in general, and what it means for credit cards, it spends a lot of time talking about rate floors.
Here is the story: What the Rate Cut Means for Credit Cards (link here).