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I was approved for an Amex card with a 6 month 0% intro APR that would then become a 17.99% APR (variable). During those 6 months the Federal Reserve increased interest rates twice. I noticed that my first statement after the 6 months was up had an APR of 18.49%. The exact wording on my approval letter was " 0.00% 6 Month introductory APR. After that, your APR will be 17 .99%. This APR will vary with the market based on the Prime Rate." My question is: Are they allowed to retroactively apply Federal Reserve Interest Rate increases? I was reading some articles from when the Fed started increasing rates for the first time since the recession and one of the effects many mentioned was that there may be less intro apr offers because the rate wouldn't increase with the prime rate during that period. I also have noticed since then that Federal reserve interest rates that occurred during my statement billing cycle have been applied to the whole month. In particular I noticed that an increase that occurred 2 days before my billing cylcle ended was applied to the balance for the full 30 days, not just the last 2 days. Is this allowed? Any insights are greatly appreciated.
From Amex terms: "Variable APRs for each billing period are based on the Prime Rate published in The Wall Street Journal on the Closing Date of the billing period." (Hence the change just before your billing period ended.)
At the time you were approved, you weren't assigned a guaranteed 17.99% after the 0% period. You were assigned Prime + 13.49%. At the time you were approved, that was equal to 17.99%.
But by the time the 0% period ended, it was 18.49%.