US economy is now undergoing a recession that is likely to end up with a deep crisis. Economists are concerned that this crisis is certainly to affect dependent European and Asian economies. European and Asian stock markets have already suffered from recession and decline in the last few months, and this painful recession is still in the process.
Scientists say that the recession in the US economy was caused by crisis on American mortgage and credit card market. Today the market is oversaturated with mortgage and credit card offers. Everyone can get a mortgage or credit card today, even consumers with poor or no credit history. The result is ever growing American credit card debt. Many consumers turned out to be unable to pay their home loans and credit cards. They found themselves in unmanageable debt. But they still have to pay their bills. Often, the biggest part of debtors’ incomes hardly covers mortgage and they have to buy necessary things on credit cards. Many are likely to go bankrupt.
Banks, credit card companies and other lenders who gave loans to people with spotty credit have lost billions of dollars. Investors in the USA and abroad are concerned about recession on US market. To relieve strains on the American households and push the country to soon and easier economic recovery, The Federal Reserve has made a decision to cut the prime rates. Already in November, the Federal Reserved dropped its most important interest rate as low as about two-year ago rate. Now the Federal Reserved is going to proceed to low the prime interest rate in order to prevent credit crisis from pushing US economy into a further recession.
This prime rate reduction is a good chance for debtors to start paying their debt. As soon as the interest rates low, credit card holders will be able to pay off their balances faster and a bit cheaper.
Banks and credit companies that have suffered from enormous losses in revenues lately expect a lot from this interest rate reduction. Lower credit card APRs will allow them to collect at least some of the charges and reduce the number of bankruptcy cases.
Today is a good time to find a good balance transfer credit card offer. Transferring your balance to a new credit card with a lower interest rate you have all chances to save some money on the APR and finally manage your debt.
This interest rate reduction is just a temporary measure. But experts believe that it will help many debtors to recover deep debt and will give a good push to US economy renewal. Then, interest rates are expected to tighten up again and US credit industry is going to back in its course.