Why a Low Prime Rate Won't Help You

Over the weekend, my bank -- Wachovia -- sent me an update about my credit card terms. With the Fed cutting rates to new lows, I thought perhaps Wachovia was informing me that the interest rate it charged me on my balance (if I had one) was going down. But that wasn't it at all.

In turns out that Wachovia is changing its policy so that even when the Prime Rate -- that rate that banks use to set consumer interest rates for everything from personal loans to mortgages to auto loans -- goes below 6 percent, my default annual percentage rate will not go below 29.99 percent. (For cash advances, the interest rate is 21.15 percent.)

The average annual percentage rate for credit cards is currently 14.33 percent, according to IndexCreditCards.com.

That suggests banks, in order to protect their own bottom lines, won't be passing on the Fed's low rates to consumers.

Has anyone else experienced changes to the credit card terms or other types of loans lately?

UPDATE: To clarify, the default rate is different from the rate charged on balances. That rate will also be increasing, although the amount was not specified.