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.
Navajo Nation is an area of land in the southwestern United States. Covering about 27,000 square miles, the region in Arizona, New Mexico and Utah currently makes up the largest area of land retained by a tribe within the United States. Home to the Navajo people, the area boasts monuments, parks, markets, trails and historic sites.
The city took its name from Athena, goddess of wisdom, strategy and war, and protector of the city. The financial, political and administrative center of the country and an all-powerful city-state in antiquity, Athens is a major center of culture. A visit to the first-ever museum dedicated to Byzantium, a stroll around the National Garden and a trip to the Olympeion archaeological site will take you back through time.
The Tourism Authority of Thailand’s Los Angeles Office announced a new initiative for would-be travelers waiting for the green light. The Buy Now, Stay Later: Thailand launch comes on the heels of Thailand’s foreign travel restrictions extending until further notice.
Looking for a truly unique travel experience and considering a new vehicle? The Volvo Overseas Delivery Program is the perfect solution to create your own adventure of a lifetime. Volvo allows you to custom order your new automobile tailored to fit your needs and desires. They will fly you to Sweden to pick up your Volvo so you can drive and explore Scandinavia and Europe on your terms for up to two weeks.
IMAGINE SETTING SAIL IN AN EXOTIC, far-flung destination, just you and your family or group of friends aboard a private yacht. The sun warms the deck, a soft breeze dances off the water, and an über-attentive crew caters to your every whim while the personal chef whips up the finest of the local cuisine with all of your culinary preferences top of mind. All the while, the captain navigates the yacht into secluded coves; to pristine, seemingly undiscovered beaches; or even to the hottest spots along the coast for a night out on the town.
A number of Kimpton Hotels & Restaurants reopened their doors around the United States. The properties have been hard at work building upon the brand’s already high cleanliness standards, while still retaining the beloved perks that enhance the uniquely Kimpton experience, including coffee hour, yoga mats and more.
United Airlines’ environmentally friendly efforts lessen the impact on local U.S. communities.