There is something that is called the “prime rate” when it comes to the basic, or index root rate, for interest rates on instruments such as home loans and credit cards. They are usually still affected only by this base rate in the fact that people know they can get this lowest rate if they wanted to, but they usually don’t get this base rate, although they may get a rate that is much better than they normally would have if the base rate, or prime rate, for that credit card or loan wasn’t so low.
An example of the lowering of the base prime rate of which all credit card APR’s and home loans and other interest bearing instruments of lent money carry, is the recent decision to possibly lower this prme rate down to about one percent, which may very well be the lowest prime rate set in our lifetime for all we know. Desperate times certainly call for desperate measures, and this may be the treasury’s attempt at helping along the ailing economy by hopefully bolstering the ailing credit market and encouraging the lending and borrowing of funds to stumulate the economy.
As far as the credit card prime rate, what this means for you is that you may be eligible for a lower interest rate if you are a person who is out in the market for a new credit card, especially if you have good credit scores. Remember, that even if the credit card prime rate is slashed or affected by cuts in the prime interest rate at the federal level, you still have to have good credit to reap the full benefits of these types of events and get a good, solid, low fixed rate APR credit card that you can use and pay off every month and if you can’t, then you can rest easy knowing the interest isn’t astronomical.
This might mean also for existing card holders that if they were to go in and renegotiate with their creditors for a lower interest rate on their credit card revolving debt, then they may be more likely to get a better deal than if the federal agency had put a higher number on that interest rate. Again, the rule of thumb that those with better credit histories and higher credit score marks get the better rate deals holds true again. It always pays to keep a spotless credit record, especially when you are negotiating with financial institutions for loans or are negotiating a better interest rate on instruments of revolving debt, such as a credit card.
Interstingly, there may be new rules governing credit cards and their practices when it comes to them jacking up interest rates without any pre-notice as well. There are going to be several meetings of the mind in Washington on credit card current practices as far as prime credit card interest rates as well as their language they use to explain their rights to increase the interest rates without real solid reasons, or at their discretion, which is good for the consumer, it’s protectionist certainly, but it’s also a key move that the government appears to be making to help ensure that more Americans don’t fall prey to loads of credit card debt.
As far as what you can do to ensure for yourself and your family that you may get the best credit card prime rate interest on your credit cards is to make sure you maintain a high quality credit score. This means that you should pay your bills on time. Use spreadsheets if necessary, but delinquent and late payments are one of the worst destroyers of good credit today, and when your credit is bad, your interest rates are even worse, and it’s hard for you to even get good rates on small temporary loans, say for furniture, electronics, and other smaller loans for periods of one to two years that are interest free that so many retail stores offer today.
Ask around to your friends, family and coworkers to see if they are getting any good deals on their credit card interest rates, and you may then be able to more easily weed through the glut of offers you get in the mail to distinguish the realistic from the overblow, the good deals from the bad, and the exceptional near-prime rate offers from the seemingly good offers that are really nothing but great numbers disguised by tons of fine print disclaimers releasing them from really offering this to anyone.
You can also make sure you read the fine print. Most of the time you will see fine print that indicates what the current, as of the time of print, prime interest rate is for the credit industry on the credit card company’s disclosures of credit terms. If you want to make sure that you are getting the best possible interest rate, then call your credit card company before agreeing to the terms and see if you might not be able to negotiate a better rate for yourself. Educate yourself a bit before calling and know your credit history so you can argue a good case for giving you a better rate.