| Low Interest High Risk Rates |
| By Credit Federal |
Published
10/25/2008
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Unsecured Credit Card
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Feds Lower Interest But High Risk Rates Remain
Are you still paying the same credit card interest rate; or maybe even a higher rate, although the fed had lowered interest rates?
Although most credit cards have variable rates which adjust according to the Federal Reserve funds rate, card issuers set bottom limits as to how low the rate can fall. Right now more than ever, this is a good time for bottom limits, to help protect against high risk. By preventing credit card interest rates from getting too low, card holders aren't overly encouraged to go on a charging spree. It also helps protect against default as well as lessens the impact of defaults.
Wells Fargo, HSBC, Discover, SunTrust and National City have a bottom limit on at least some of their credit cards. Wachovia; however, doesn't impose a minimum interest rate on credit card purchases, but limits how far its penalty interest rate; which is applied to consumers who pay late twice in a row, and cash advance rate can drop. Bank of America, American Express and U.S. Bank all claim no floors on credit card rates. As for Chase and Citigroup, it's unknown whether they have limits.
What can you do? You can either switch to another credit card company that's offering a lower or special introductory rate, or you can contact your current issuer and ask for a lower rate. Or, you can pay no interest by switching to a secured credit card.
Depsite a credit card company's reluctance to pass along lower interest rates to their card holders, and although the risk of balance default is at an all time high, there's still the spirit of competition for good customers. If you've been a good customer; even if your credit score isn't the greatest, your card company will likely try hard to keep you and will agree to lower your rate. If not; and if you have a good credit score, there are plenty of competitor companies that will give you an enticing offer, either as a special introductory rate or rewards like cashback, plus a lower interest rate.
Search online for a better unsecured credit card.
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