Credit Downgrade of 15 Global Banks Could Cost You

What's Hot


2 Types of Black Marks Might Vanish From Your Credit File SoonBorrow

6 Ways the Obamacare Overhaul Might Impact Your WalletInsurance

7 Dumb and Costly Moves Homebuyers MakeBorrow

This Free Software Brings Old Laptops Back to LifeMore

Obamacare Replacement Plan Gets ‘F’ Rating from Consumer ReportsFamily

Beware These 12 Common Money MistakesCredit & Debt

21 Restaurants Offering Free Food Right NowSaving Money

17 Ways to Have More Fun for Less MoneySave

House Hunters: Beware of These 6 Mortgage MistakesBorrow

30 Household Uses for Baby OilSave

25 Ways to Spend Less on FoodMore

Nearly Half of Heart-Related Deaths Linked to These 10 Foods and IngredientsFamily

5 Surprising Benefits of Exercising Outdoors in WinterFamily

10 Ways to Save When You’re Making Minimum WageSave

Boost Your Credit Score Fast With These 7 MovesCredit & Debt

7 Painless Ways to Pay Off Your Mortgage Years EarlierBorrow

The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

The True Cost of Bad CreditCredit & Debt

10 Companies With the Best 401(k) PlansGrow

This Scam Now Tops ID Theft as the No. 2 Consumer ComplaintFamily

6 Stores With Awesome Reward ProgramsFamily

6 Ways to Save More at Lowe’s and The Home DepotSave

6 Healthful Treats for Your DogFamily

New Study Ranks the Best States in the U.S.Family

Thousands of Millionaires Moving to 1 Country — and Leaving AnotherGrow

Strapped for College Costs? How to Get the Most From FAFSABorrow

6 Overlooked Ways to Save at Chick-fil-AFamily

Ask Stacy: What’s the Fastest Way to Pay Off My Mortgage?Borrow

Where to Sell Your Stuff for Top DollarAround The House

8 Ways to Get a Good Price on a Shiny New AutoCars

Ask Stacy: How Do I Start Over?Credit & Debt

Secret Cell Plans: Savings Verizon, AT&T, T-Mobile and Sprint Don’t Want You to Know AboutFamily

30 Awesome Things to Do in RetirementCollege

14 Super Smart Ways to Save on TravelSave

The Rich Prefer Modest Cars — Should You Join Them?Cars

You’ll Soon Pay More to Shop at CostcoSave

10 Ways to Save When Your Teen Starts DrivingFamily

What does it matter if a bank halfway around the world starts having problems? Unfortunately, it could mean higher interest rates for you.

This post is from partner site LowCards.com.

Moody’s Investors Service recently cut the credit ratings of 15 banks due to their significant exposure to the volatility and risk of the global financial markets.

Earlier this month, Standard & Poor’s also warned that the United States could face another downgrade in credit rating if the government doesn’t get a serious plan about paying down the national debt.

While the Federal Reserve has vowed to keep interest rates at record lows through 2014 in an effort to stimulate the economy, these credit downgrades for banks and the government can result in higher interest rates for consumers.

The three national credit rating agencies – Fitch, Standard and Poor’s (S&P), and Moody’s Investors Service – measure the creditworthiness of companies and governments. The higher the rating, the less risky the investment – and the more likely the bank or government will repay the loan. Credit downgrades are similar to a drop in credit scores and indicate a higher risk of default on loans. This can lead to higher interest rates for banks and the government.

In August 2011, S&P downgraded the rating of the United States’ long-term debt from AAA – the highest rating and the safest investment – to AA+.

In their action last week, Moody’s downgraded a number of big banks including Goldman Sachs, JP Morgan Chase, Citigroup, Bank of America, and Morgan Stanley because their core business has structural weaknesses. However, this downgrade may accelerate their problems.

Banks depend on securing low interest rates on the money they borrow to make profits on the loans they make. Higher interest rates on their borrowing will squeeze profits that have already been sliced by regulations and changes in the industry.

Increasing interest rates for government and bank loans could lead to increases in all interest rates, including credit cards, mortgages, and student loans. Credit cards are the easiest form of credit, but the average interest rate is already very high. According to the LowCards.com Weekly Credit Card Rate Report, the average advertised credit card APR is currently 14.30 percent, up from 11.64 percent in May 2009, the week the CARD Act passed.

“The interest rate for credit cards continues to climb even though the prime rate has remained at 3.25 percent since December 2008,” says Bill Hardekopf,  CEO of LowCards.com. “Interest charges are a primary source of income for lenders, and rates will continue to climb as the bank’s own interest costs increase. In addition, recent regulations are cutting their revenue. These higher rates are usually passed on to consumers. The best way for cardholders to avoid these interest rate hikes is to completely pay off the balance on your credit cards each month.”

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: Ask Stacy: What’s the Best Way to Borrow?

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 2,067 more deals!