Consumer Payment Card News

Rate Action

Despite high gas prices and the recent hurricane disaster, the government decided to jack up short-term interest rates another notch today. In response, banks pumped up their prime rate to 6.75%, setting the stage for another round of hikes in credit card APRs. The Federal Open Market Committee said higher energy and other costs have the potential to add to inflation pressures. However, core inflation has been relatively low in recent months and longer-term inflation expectations remain contained. Most major credit card issuers have migrated back to variable interest rates, reducing the number of fixed rate cards in the market to below 50%, compared to nearly 70% two years ago.

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