Fed cuts Interest Rates - how does that affect me

[LiLTide]

The Fed has cut Interest rates to .25%.  How does that affect me with regard to my credit cards that carry a balance month to month?

[Anonymous]

The current rate cuts effect on your cards is going to depend on how the apr is determined by your issuer. You'll need to read the terms and conditions for your card to figure iit out.

[Anonymous]

If the APR for your cards with balances are based on a margin over wall street journal prime then you can expect your rate to drop by 0.75% during the next rate review date.  If the APR isn't based on prime then don't expect any change.

[haulingthescoreup]

The WSJ prime rate has traditionally dropped by the same amount as the federal funds rate. No guarantee that they will do this again, though. It's not automatically linked or anything.

So mortgages, HELOC's, variable-rate APR credit cards and so forth can be affected.

Lots of people with variable-rate APR CC's have thought that their banks were beaming fondly upon them over the past year as the prime rate has dropped, but in fact, it was just due to the external rate change.

The prime is already at 4%. I suppose it could go lower, but it's hard to imagine.

[haulingthescoreup]

Well, sure enough, the prime rate was just lowered to 3.25%. Amazing. (thanks, psychic!)

It's nice to get mortgages rates lowered, but I honestly don't people are going to increase spending when they're worried about hanging on to their jobs.

I'll bet CD rates are lowering right now!

[Anonymous]

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@haulingthescoreup wrote:
Well, sure enough, the prime rate was just lowered to 3.25%. Amazing. (thanks, psychic!)

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You're welcome!!!

[Anonymous]

I'd count on CD rates going lower but Prime doesn't really have anything to do with mortgage rates.

[jmbfl]

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@Anonymous wrote:
I'd count on CD rates going lower but Prime doesn't really have anything to do with mortgage rates.

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Sure it does. Many HELOC's are tied to prime!