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By Michael McKinstry, CardTrak.com

Today's surprise Fed interest rate cut is very good news for credit cardholders as the prime rate is being pushed down to 6.50%, the lowest since August 2005. With a median revolving credit card balance of about $6600 and most credit card rates pegged to the prime rate, the average household will save about $50 over the next twelve months in interest costs due to today's action. Since dropping from 8.25% in September the Fed action will reduce credit card interest costs by more than $10 billion over the next year. Considering all the rate cuts since last summer, a family with total revolving credit card balances of $6600 will realize a savings of about $115 per year while those carry balances around $10,000 will save around $175 per year. Americans owed about $750 billion on general purpose credit cards at year end 2007. Approximately 87% of all major credit cards carry variable interest rates. Over the past year the average variable rate credit card has dropped from 16.59% to 15.79%.