When the Fed Funds cuts rates, are adjustable credit cards affected?
Not necessarily but perhaps eventually. The Fed cut the discount rate at which BANKs borrow from the Federal reserve… not the rate at which consumer’s borrow from the/a bank. The theory is that if they can get money for less they can “sell” it to you for less but that wasn’t actually what this most recent reduction was ennacted to do. The reason (besides widespread global crashes in markets around the world during the prior day’s trading) for the Feds severe cut in rates (lowest in more than 20 years – was to stave off panic amoung traders and the secondary market. Banks can borrow at this reduced rate (lower than what they receiving for notes they have out or that are going bad at the moment) and take in cash to keep their balance sheets a little healthier. They have to have cash on hand and when the notes they have out don’t pay off… then they have lent more than they have taken in and the cash crunch gets tighter. A little cheap cash helps make the books better… Your credit ca
