With the latest cut in the federal fund rate on March 18th, consumer are looking for some relief in the rates they pay for credit. The Federal Reserve lowered rates by a hefty 3 / 4 of a percentage point to 2.25% in an attempt to offset the ongoing credit and financial crisis. The benefits are starting to trickle down with most major credit card issuers dropping rates on variable rate offers.

However, with the turbulance in the financial industry, large losses in the subprime market and an increasing number of cardholders struggling to pay their debt, credit card issuers are under pressure to actually raise rates. Despite the lowest federal fund rate in three years, the latest trend is to offer consumers ‘fixed rate’ credit cards to avoid further down trends.

Although most credit cards on our site include variable rates - which have continued to drop as interest rates go down - credit card issuers are increasing the amount of fixed APR offers sent by mail. Discover, in particular, has embraced this new strategy by sending offers that are now almost exclusively fixed. This is a complete reversal to the previous year when all Discover Card offers were variable. Discover recently started mailings on a 8.99% fixed rate offer while Chase and Bank of America mailings continued to promote fixed rates as low as 7.99%. Our best low APR credit card is currently the Pulaski Bank Visa at 6.50% fixed.

For most, rates are continuing to move down. If you find yourself with a rate that is increasing and have a good credit score and payment history, don’t sit back and accept the new rate quietly. Call your credit card company immediately and ask for a lower rate. If you don’t get a lower rate, it’s time to comparison shop to find lower rate credit card deals. Take time to comparison shop and look at the terms and conditions for each card; don’t just apply for the first offer you receive in the mail.

Posted in News & Info, Card Advice

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