You have some input on interest rates

By Dan Thanh Dang Consuming Interests

October 11, 2008

The Federal Reserve cut its key lending rate by half a percentage point this week in the hope of stimulating lending and spending.

Are you wondering how this will affect you, the consumer?

We've written a lot about how lenders have tightened their practices and made it more difficult for consumers to get credit.

Eileen Ambrose's column last Sunday covered how the credit crunch is affecting credit card offers, too.

But will you see interest rates drop on car loans, credit cards and business loans?

The answer? Maybe.

Bill Hardekofp, CEO of LowCards.com and author of The Credit Card Guidebook, says the rate cut will benefit some cardholders with variable rates because their interest rate might drop in the next 30 to 45 days.

But not every cardholder will see a rate cut.

Card issuers are paying attention to a number of factors to predict cardholder risk now.

If you're deemed a high risk, it could push your rates up.

Hardekofp says the following are other factors that could affect your rates:

• Your credit score is low or was lowered recently.

• Your balance is too close to your credit limit on your card or other cards - even if it was the issuer who lowered your limit and caused your balance to be closer to your limit.

• Many card issuers still give themselves the right to change rates at any time for any reason. Read your contract. "Any time for any reason."

Sometimes it's random, but sometimes it could actually be for a legitimate reason, such as economic market conditions.

Hardekofp suggests asking your card issuer to lower your rate.

If that doesn't work, continue building a good payment history and credit score and ask again.

It never hurts to ask.