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.
One thing surprising about the Prince Edward Island capital is its abundance of shops specializing in affordable, fashion-forward jewelry rendered in sterling silver, vermeil, 14K gold and semi-precious stones. Whether you prefer delicate pieces or bold wearable art, you can be assured the pieces for sale are inspired by the maritime island setting and, therefore, specific to the place where they are created. Here are a few shining, woman-owned examples:
The Islands of Tahiti offer a range of captivating activities for travelers with diverse interests, from hiking to breathtaking waterfalls, riding horses on secluded beaches; swimming with sharks; or immersing in Polynesian culture through traditional dance, music and art. For watersports enthusiasts, the crystal-clear lagoons offer exhilarating experiences like surfing, kiteboarding and paddleboarding. And if you’re looking to relax, the pristine beaches, overwater bungalows and tropical sun offer the perfect setting. With 118 islands and atolls to explore, island hopping is an excellent way to experience the full diversity of The Islands of Tahiti. With its blend of adventure, culture and relaxation, The Islands of Tahiti offer a truly unique travel experience.
Norway, a haven for visionary artists, architects and designers, showcases an exceptionally diverse array of cultural attractions. This year, the country commemorates exciting milestones and unveilings captivating enthusiasts of the arts, from iconic scenic routes to new museums to gallery openings. Up Norway features these new offerings in personalized itineraries catered to aesthetes.
As a peripatetic traveler, I am always trying to balance the pleasures of dining well with a life-long challenge to control my weight. It’s not always easy, because I consider tasting typical, authentic regional dishes among the highlights of most journeys, and those foods are rarely known for “healthful” rankings! So, I started staying at spas way back in the 1980s — before they were ubiquitous — because meals were assured to be pure, clean and wholesome.
Flying to the paradise of Turks & Caicos has never been easier thanks to many new, non-stop flights across three airlines to the destination. Southwest Airlines, Delta Air Lines and Virgin Atlantic Airways all announced new flights, allowing travelers to visit this dreamy destination.
With the rush of Black Friday and Cyber Monday over, many of us still wrack our brains on what to buy friends and family this holiday season. For the traveler in your life, finding the perfect gift can go a long way. Here are some top-quality products sure to impress loved ones this season:
One affordable plan can protect an entire year of trips: business or pleasure, short or long, domestic or international.
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