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.

Shari Storm

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3 Responses

  1. Leslie says:

    Shame on you. Going the way of the big banks. Since rates have nowhere to go but up I suspect my rate will be higher than I have been paying eventually. Is there a cap on how high the rate can go? What’s wrong with the same rate for an excellent payment history? I will definitley be working harder to get to pay off each month.

  2. shari storm says:

    We don’t want to raise our credit card rates. I’ve worked here 12 years and we’ve only changed rates three times. Twice they went down. However, one of the unintended consequences of the newest credit card legislation is that it encourages credit unions like us to switch to a variable rate because of the inflexibility of the legislation. We don’t want to put ourselves in a position of NEVER being able to change a rate when we need to.

    We lowered our rates by .775%. That means Prime must go up by more than 1.55% for your credit card rate to get back up to what it was before we lowered it. We are lowering rates in exchange for flexibility. We need flexibility if rates go up.

    We included a multiplier of .5% to the index is to reduce the amount our rates will go up if the Prime Rate goes up. Another reason we are lowing our rates with this change is to prove our commitment to keeping our rates low and fair.

  3. Mary says:

    Leslie, Did you not read the message? The new law makes it necessary to change to the variable rate. I say Verity is doing a good job with prime + 7%, my bank card just sent me a notice that they were going to prime + 20%, with a floor of 24.99% and no celing. Going the way of the big banks? Hardly!

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