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August
9, 2006
Fed
Interest Rate Decison Good News for Credit Card Holders
The Federal Reserve's Open Market Committee decided to hold
interest rates steady yesterday, good news for credit card holders
and others with variable-interest loans. Most credit cards offer
variable interest rates tied to the Fed's rate policy--when
the Federal Reserve raises rates, cardholders' rates go up as
well. According to the IndexCreditCards.com Credit Card Monitor,
the average credit card interest rate on basic credit cards
with no rewards climbed from 12.6% at the beginning of 2006
to the current 14.16%.
While
the Fed held steady, it should be noted that it was a rare split
vote--the final tally was 9-1, with Jeffrey M. Lacker preferring
a quarter-point hike. While this seems minor on the surface,
many speculate that the Committee generally falls into line
to create a unanimous vote, even if there is internal disagreement.
In this case, Lacker obviously wanted his disagreement on the
record, which may mean that the next Fed meeting will be quite
spirited. Whether that means another hike could be forthcoming
or that the brakes have been set for a longer haul is, as always,
anyone's guess.
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