Fed Interest Rate Decison Good News for Credit Card Holders

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.

Published 08/09/06 (Modified 05/07/12)