What the just-announced Fed interest rate cut means for your credit cards and savings
Published 2:03 PM EDT Sep 18, 2019The Federal Reserve lowered its benchmark interest rate by a quarter percentage point Wednesday for the second time in the past two months. And economists are forecasting a third cut by the end of the year.
Yet Wednesday’s move unwinds just a small portion of the Fed’s nine hikes from late 2015 through last year, says Greg McBride, chief financial analyst at Bankrate.com. A look at how a Fed cut, which trims its benchmark rate to a range of 1.75% to 2%, could affect these products:Another cut? Fed looks ready to lower interest rates again with the economy facing risksCredit card rates are generally tied to the prime rate, which in turn is affected by the Fed's benchmark rate. While the rate will eventually drop by a quarter percentage point, it might not happen as quickly as rates increased.
A quarter-point reduction on a $30,000 home equity line of credit would shave the monthly payment by $6.25, McBride says. Two such cuts would trim the bill by $12.50. By contrast, the nine rate increases since late 2015 have lifted the same payment by $56. But as with auto loans, only about half of July’s quarter-point rate cut was passed through to adjustable mortgage rates, Kapfidze says.The Fed’s key short-term rate affects 30-year mortgages – the most common purchase home loan – and other long-term rates only indirectly. Those rates more closely track inflation expectations and the long-term economic outlook, and have already fallen substantially in recent months as concerns about the economy and low inflation have grown.
Banks move quickly on such longer-term accounts because they don’t want to get stuck paying higher returns for extended periods when rates are falling, McBride says.
Brasil Últimas Notícias, Brasil Manchetes
Similar News:Você também pode ler notícias semelhantes a esta que coletamos de outras fontes de notícias.
A quarter of millennials say most of their debt is credit cards, not student loansOne in four millennials surveyed said the main source of their debt is credit cards; 15% said it's their mortgage; and 10% said it's student loans.
Consulte Mais informação »
CBS Credit Union Manager Gets 14 Years for $40M EmbezzlementEdward Rostohar admitted he used the money to fund a gambling habit, buy luxury cars and watches, and travel by private jet.
Consulte Mais informação »
I’m engaged to a ‘money monster’ who racks up parking tickets and credit-card debt'I’m engaged to a ‘money monster’ who racks up parking tickets and credit-card debt.'
Consulte Mais informação »
Coming Soon in China: Social Credit for Companies, TooInternational media have focused mostly on the dystopian potential of individual social-credit scores, but foreign businesses will be affected, too.
Consulte Mais informação »
After $40-million embezzlement, former CBS credit union manager gets 14 years in jailEdward Rostohar, 62, of Studio City, admitted he gambled away much of the money and spent the rest on private jets and expensive cars and watches.
Consulte Mais informação »
Opinion | Trump finally deserves credit for something: Making the Middle East worseThe dangerous downward spiral in the Middle East stems from the U.S. scrapping the Iran nuclear deal without a strategy in place.
Consulte Mais informação »