Question

Explain the connection between lower rates (in regards to Fed lowering the interest rates) and this outcome: Credit card debt becomes easier to pay off.

Answer 1

when the interest rate through monetary policy by Federal Reserve is lowered, it means that the bank are also required to pass onto, the benefits to customers so the bank will lower the fund rate, in order to to pass on to the effect and they will also reduce the interest rate on their loans, so the credit card debt which has been issued earlier, and they have certain higher rate of interest will be having a lower rate of interest due to fed interest rate cut, so this credit card payments will be lower in comparison to what they where earlier before.