While the stock market generally sucks this year, the credit card market is dropping like a rock with lower interest rates. The Feds dropped short term interest rates today by another half a point. As a result, American consumers will save between $1.2 billion and $2.4 billion over the next twelve months. The action today by the Federal Open Market Committee will most likely drive the prime rate down to 8.0%. Most variable rate credit cards are based on either the prime rate or LIBOR rate. So far this year, the Feds have sliced 1.00% off short term interest rates which has dropped the prime rate from 9.50% to 8.50%. With most bank credit card issuers adjusting card rates monthly, many consumers have already watched their APRs drop. However with today’s action, coming just ahead of the start of a new quarter, nearly all holders of variable rate cards will see a major rate cut in their April credit card statements. American consumers currently owe $644 billion on all credit cards. About $546 billion of this debt is owed on major cards such as VISA, MasterCard, American Express and Discover. Approximately $98 billion is owed on retail or store credit cards. Nearly half of all credit cards in the U.S. have variable interest rates. (Three years ago about three quarters of credit cards had variable rates. Many top issuers have since switched to fixed APRs for new cardholders.) Nevertheless with 80% of total credit card debt subject to finance charges, and with 50% of these charges linked to variable rates, Americans will save $1.2 million annually as a result of today’s action. However since short term interest rates have declined so dramatically since the start of this year, it is very likely that even fixed interest rates on credit cards will be impacted. If fixed credit card rates fall as expected, the savings could approach $2.4 billion. Look for variable card rates to drop like a rock in April with fixed rates coming down this summer.