Credit card holders should shop around

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When the Federal Reserve meets and changes rates, we all have questions: What does it mean to me? Is my credit card company going to sock me with another rate increase? Bankrate is here to help. We’ve looked at five categories — mortgages, home equity loans, auto loans, credit cards and certificates of deposit — to determine if the Fed’s moves made you a winner or a loser. Here’s a look at credit cards:

 Winner: Credit card debtor
Today the Federal Open Market Committee, or FOMC, cut the federal funds target rate for the second time in eight days, slashing by another 50 basis points. The federal funds rate will drop from 3.5 percent to 3 percent, and the prime rate, which is usually 3 percentage points higher, will fall from 6.5 percent to 6 percent.

“Some, not all, variable credit card rates are tied to the prime rate,” says Gus Faucher, director of macroeconomics for Moody’s On those cards, the APR may drop half of a percentage point.

A single rate reduction of 50 basis points won’t provide huge savings on interest, but he says “it’s the totality of the cuts that matters more than one particular cut in the interest rate.”

Including this latest decrease, the prime rate has fallen 2.25 percentage points since September, from 8.25 to 6 percent.

People who carry fixed-rate cards likely won’t see their APRs lowered. Faucher advises these folks to shop around and consider getting a variable-rate card to take advantage of the lower rates.

 Take action
Variable-rate cardholders should call their issuer about getting a lower rate, and fixed-rate cardholders may want to check out variable-rate cards. Regardless of where rates are headed, always make payments on time and pay off as much of your balances as possible.

Read more about who wins or loses by clicking on the tabs at the top of this story.