If Rates Are Falling, Why Don't These?

As interest rates fall, consumers are looking with puzzlement and anger at the carrying charges on their credit-card balances. Why have those rates refused to budge? The spread between what banks pay to borrow money and the interest rates they charge on credit cards has grown to nearly 14 percentage points, the widest gap since the deregulation of interest rates in 1982. The chasm has attracted both public scorn and scrutiny. Declares Stephen Brobeck, executive director of the Consumer Federation of America: "Consumers are being gouged by the banks."

Last month the Federal Reserve reduced the rate it charges banks for...

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