We are making some changes to our credit card rates. You’ll be getting information in the mail by the end of this week. Below is what we are posting to the website. I’d love to hear what questions members have.
We are changing our credit card rates so that they are now tied to an index with a margin.
The index we are using is the Prime Rate multiplied by .50. We chose to multiply the Prime Rate by .50 to reduce the degree of change in your rate. We like keeping your rate low and steady. If you’ve had a card with us for any degree of time, you know that we don’t like to change rates. However, the new credit card legislation makes it necessary to switch to a variable rate so that we aren’t saddled with the same rates for infinity. (After all, who knows what rates will be in 2047?)
You can find the Prime Rate that we will be using by reading the Western Edition of The Money Rates Section of the Wall Street Journal. The index is determined the 1st day of the month preceding the billing cycle date and that will be the rate we use for the index.
As of November 30, 2009, the highest Prime Rate was 3.25%.
Along with the index, your rate will be calculated by adding a margin. The margin is different for each person. The margins range from 7% (700 basis points) to 16% (1600 basis points), depending on your credit score.
The most important news is that this new method of calculating your rate will lower your credit card rate. You’ll be getting something in the mail soon that tells you exactly what your rate will be. So watch for it.
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