The Fed Just Changed Rates, But Your Credit Card APR May Not Move Right Away

A Federal Reserve rate change does not automatically appear on every credit card account the same day because variable APRs follow each card’s index and billing-cycle rules – Shutterstock

The Federal Reserve changed interest rates on September 16, but credit card holders should not expect their APR to move in lockstep with the Fed’s announcement. In fact, the latest Fed decision went in the opposite direction from a rate cut: The central bank raised its target range by a quarter percentage point, to 3.75% to 4%.

That is important because credit card rates do not simply mirror the number announced at a Fed meeting. Most variable-rate cards use an index, commonly the U.S. prime rate, plus a margin set by the card issuer. The timing of an APR change depends on the card agreement, the index and the issuer’s billing-cycle rules.