credit cards

Credit card rates to wallow in Fed trough

Card rates drag into 2014
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Card rates drag into 2014

The Fed's forecast to keep a benchmark interest rate near zero for more than two years means cheaper credit card rates.

"I think credit cardholders win," says Bill McCracken, CEO at Synergistics Research Corp., a marketing research firm for financial services in Atlanta. "At worst, issuers will keep rates they charge consumers for their balances about the same."

Credit card rates, especially variable rates, are tied to the prime rate, which typically follows the federal funds rate. The annual percentage rate on variable credit cards was 14.5 percent this week, while the APR on fixed cards came in at 13.71 percent, according to Bankrate's latest weekly survey of interest rates.

Any big change in interest rates would come from new regulations that cut into bank profits. Issuers likely would pass on the higher costs to cardholders, McCracken says.

Otherwise, expect much of the same for credit card rates, unless the Fed changes policy should the economy grow faster than expected.


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Product Rate Change Last week
Balance Transfer Cards 15.77%  0.06 15.71%
Cash Back Cards 16.48%  0.07 16.41%
Low Interest Cards 10.96%  0.10 10.86%
 
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