THE FEDERAL FUNDS RATE is the interest rate targeted by the Federal Reserve. It is the interest rate banks charge each other for overnight loans. After the recent cut on Oct. 30, 2019, the third cut this year, the rate will hover between 1.5 percent and 1.75 percent. The federal funds rate is not the rate used by banks for lending to individuals and businesses; that is the prime interest rate, currently at 4.75 percent. Since 1994 banks commonly calculate the prime interest rate as the federal funds rate plus 3 percent (in this case 1.75 percent plus 3 percent). Every U.S. bank sets its own prime rate; however, most utilize the same one.
The Federal Reserve changes the interest rate based on its feeling about the direction in which the economy is moving. The Federal Open Market Committee convenes about every six weeks and may also hold emergency meetings if monetary policy merits discussion between scheduled meetings. When economic data show the economy doing well, the Federal Reserve looks to keep the interest rate the same or perhaps raise it; the opposite occurs when the economy shows signs of weakness.
While lenders usually use the prime rate to calculate many loan interest rates, it is not mandatory for them to use this rate, nor is it a law. For instance, a mortgage interest rate is frequently lower than the prime rate because the mortgage is secured with real estate as collateral, which limits the bank’s downside if the loan goes bad. The customer’s credit history also plays a role in the bank’s interest rate decision.
The all-time high for the prime interest rate was 21.5 percent in 1980. Since 2017 the prime interest rate has hovered between 4 percent and 5.5 percent. The recent rate cuts signify the FOMC has concerns about the economy, as it has reduced the prime interest rate by 0.75 percent this year. Not every existing loan is affected by rate cuts, however. For example, for a loan with a balance of $500,000 with a variable interest rate based on the prime rate, it would cost $3,750 less per annum in interest charges due to the 0.75 percent lower interest rate. If someone has a fixed interest rate loan, the amount of interest would not change because the interest rate does not vary and would not be impacted by any rate cuts.
While it may seem like a good thing to have lower interest rates, it may signal a slowing economy and may negatively impact the value of investments, such as retirement plans or stock holdings.
Step right up to the greatest show on Earth as FXExpress Publications, Global Traveler, trazeetravel.com and whereverfamily.com celebrate their 2020 award winners! Join the big top on Dec. 14 as we virtually award the winners of the 17th annual GT Tested Reader Survey awards, including the Airline and Hotel of the Year; the 17th annual Wines on the Wing Airline Wine Survey; the eighth annual Leisure Lifestyle Awards; the sixth annual The Trazees; and the third annual Wherever Awards.
I had just taken off my sandals, stepping onto the white-sand beach for a late-morning walk to a secluded spot I heard about from a front desk clerk, when I glanced down and saw the time on my phone. It had just turned 11 a.m., which meant it was only 7 am back home, the perfect time to call and say good morning to by husband before he left for work. Not quite ready to head back to my room, I decided I’d test the WiFi signal and made the call as I continued walking toward the shoreline.
San Antonio celebrated 300 years of progress in May 2018. With a clear vision following that anniversary year, the Texan city set its sights firmly on 300 more. While commemorating this milestone, the city underwent a major overhaul to prepare for the next phase in its history.
Custom order your Volvo through the Overseas Delivery Program and receive round-trip airfare, hotel accommodations, and a personalized delivery at the Volvo Factory Delivery Experience in Gothenburg, Sweden. Your experience begins in Sweden with insurance and registration included, enabling you to drive your new Volvo throughout Scandinavia and Europe. Create the adventure of a lifetime with the program named Best Overseas Delivery four years running, and return home with the ultimate souvenir.
When you think of a relaxing spa day, mountains, rivers and view of gorgeous landscapes pop in your head; a place to get away from the hustle and bustle of any city’s booming music and honking taxis. SoJo Spa Club and Hotel gives you the relaxing feeling of being away while still staying close to the busy center of Manhattan.
Remote workers looking for an upgrade from their home offices might want to consider Karisma Hotels & Resorts’ Workcation offer. Those booking an extended stay of 10-plus nights are eligible for discounts of up to 15 percent off best available rates; those booking 20-plus nights enjoy up to 25 percent off. The offer is available at Karisma Hotels & Resorts’ diverse portfolio of properties.
Dance the night away with Grand Hotel’s Ballroom Dance offer, available May 16–18. Dancers of all skill levels will experience a diverse range of ballroom dance styles, alongside daily breakfast and dinner, a welcome reception and complimentary golf green fees.