Consumer Payment Card News

Prime Cut

This week’s Fed interest rate cut is good news for credit cardholders as the prime rate has been pushed down to 7.25%, compared to 8.25% one-year ago. With a median revolving credit card balance of about $6600, the average household will save about $70 next year in interest costs. The latest stats also show that the gap between variable rate credit cards and fixed rate credit cards has narrowed to 100 basis points. At the beginning of this year the gap stood at 188 basis points. Variable (go-to) rate cards have saturated the market this year, now making up 87% of all cards-in-force. Less than five years ago, the number of fixed rate cards outnumbered variable rate cards. Today, variable rate cards carry an average go-to interest rate of 16.02% versus 15.02% for the average fixed rate cards. In January, the average go-to variable interest rate was 16.59% versus 14.72% for fixed rate cards. (The averages do not include introductory or punitive interest rates.)

CREDIT CARD INTEREST RATES
Month Prime Fixed Variable
Jan 07 8.25% 14.72% 16.59%
Feb 07 8.25% 14.74% 16.61%
Mar 07 8.25% 14.74% 16.61%
Apr 07 8.25% 14.88% 16.64%
May 07 8.25% 14.92% 16.65%
Jun 07 8.25% 14.93% 16.65%
Jul 07 8.25% 14.96% 16.69%
Aug 07 8.25% 14.97% 16.70%
Sep 07: 7.75% 14.98% 16.58%
Oct 07: 7.75% 14.99% 16.39%
Nov 07: 7.50% 15.00% 16.29%
Dec 07: 7.25% 15.02% 16.02%
Source: cardtrak.com (www.cardtrak.com)

Leave A Reply