QWhy Are My Credit Card Rates Rising?
ATo understand the answer this question, one must first understand how the federal government affects interest rates. On May 16th, 2000, the Federal Reserve Board of Governors raised the discount rate by 50 basis points or .50% (read press release here). Raising the discount rate, the rate that the Federal Reserve charges a bank to borrow funds when a bank is temporarily short of funds*, has become a trend as of late and most authorities feel that more rate increases are likely in the near future. As you might expect, when the Federal Reserve raises the discount rate, banks pass this rate increase on to consumers. In regard to credit cards, this is typically accomplished by banks raising their prime rate.