 TITLE: The Fed Cut Rates—Here’s Why That’s Important CONTENT: How Might a Rate Cut Affect Credit Cards?\n-----------------------------------------\nMost credit cards have a variable interest rate that's tied to a benchmark rate called the prime rate. The prime rate is, in turn, influenced by the Fed funds rates. As the benchmark rises or falls, credit card interest rates on purchases, balance transfers and cash advances follow.\nWhile the Fed rate cut may lead to lower credit card interest rates, a slight change won't make much of a difference for borrowers in the short term. For example, a 2% interest rate discount only saves you about $5 a month on a $3,000 balance.\nIf you anticipate needing to carry a credit card balance, consider contacting your credit card issuer to negotiate a lower interest rate in addition to the variable-rate drop. Although credit card issuers tend to get more stringent with new account openings during an economic downturn, you could also look for a new card that has a promotional introductory 0% rate. END