Wednesday, October 29, 2008

Does Your Credit Card Have an Interest Rate Floor? (Reprise)


With the Federal Reserve cutting interest rates today (down another 50 basis points) -- for the second time in three weeks (link here) -- I think it's instructive to trot out a story that I pointed to earlier this month. Today's rate cut will bring the prime rate down to 4%. At some point, though, these rate cuts could stop having an impact on your credit-card interest rates. That's because many cards have interest rate floors.

If you missed it the first time around, here is the story (dated October 8, 2008) I recently did on interest rate floors (link here).

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6 comments:

The Lion said...

I have seen no change in my interest rates. I have a feeling these savings are not being passed onto me....

GlobCredit.com said...

My Citibank and Nordstrom cards continue to move lower. I haven't paid attention to the rest of my cards.

We're now at 4% on prime. My nordstrom card can go no lower. It's floor is 4%.

nighshft said...

I called my Chase CC and explained that I just don't use them due to the high interest they charged, They looked at my account and immediately lowered it. Sometimes all you have to do is ask...

GlobCredit.com said...

Nightshft, I totally agree.

Unfortunately, most of my APRs are already very low (see my 4% Nordstrom card). My Citi APR is now 6%. Hell, one of my highest APRs is on my Chase card, which stands at 12.99%. I call every few months just for giggles. The robots, er, customer service reps always say the same thing: can't do anything for you this time around.

Since I pay my bills in full, APRs are meaningless. But I still want to have APRs that reflect my creditworthiness.

Daniel said...

Just a side note...AMEX has canceled One and Optima....maybe a sign that they are moving to Charge Card only company soon.

GlobCredit.com said...

Thanks, D. We shall see how it shakes out for Amex. I think the company would be more comfortable as a charge card company, but so long as the credit card biz is profitable, I imagine American Express will remain in the biz.

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