RateAPY

How Politics May Affect Credit Card Rates

Posted by: RateAPY Bank Rates News
January 26th, 2010

It seems like the interest rates that you pay of your credit cards should be far removed from what goes on in Congress, right? There may be a few degrees of separation, but ultimately politics may have some effect on the interest rates on your credit cards. Here is an example of one possible effect:

1. Congress is holding Federal Reserve Chairman Ben Bernanke’s second-term confirmation off until the eleventh hour.
2. Many of the big seats in Congress, such as Senate Majority Leader Reid’s, are up for election this November.
3. Congress would be very pleased if the Fed held back on pulling the stimulus out of the economy until after the elections.
4. The Feds may need to unwind the stimulus measures in the economy to prevent inflation. They usually do this by raising their key interest rate.
5. The Fed’s key interest rate affects the prime rate, which is used to figure the interest paid on many of the most popular credit cards.