What that means for you

[Pelican Press 0]

What that means for you

The Federal Reserve announced Wednesday it will leave interest rates unchanged. Fresh inflation data issued earlier in the day showed consumer prices are gradually moderating though remain above the central bank’s target.

The Fed’s benchmark fed funds rate has now stood at 5.25% to 5.50% since last July.

For consumers already strained by the high cost of living, there is an added toll from persistently high borrowing costs.

“It’s not enough that the rate of inflation has come down,” said Greg McBride, chief financial analyst at Bankrate.com. “Prices haven’t, and that is what is really stressing household balances.”

More from Personal Finance:
Average 401(k) savings rates recently hit a record
Here’s what’s wrong with TikTok’s viral money hacks
What to do if you think you’re underpaid

Inflation has been a persistent problem since the Covid-19 pandemic, when price increases soared to their highest levels since the early 1980s. The Fed responded with a series of interest rate hikes that took its benchmark rate to its highest level in decades.

The federal funds rate, which is set by the U.S. central bank, is the rate at which banks borrow and lend to one another overnight. Although that’s not the rate consumers pay, the Fed’s moves still affect the borrowing and savings rates they see every day.

The spike in interest rates caused most consumer borrowing costs to skyrocket, and now, more Americans are falling behind on their payments.

From credit cards and mortgage rates to auto loans and student debt, here’s a look at where those monthly interest expenses stand.

Credit cards

Since most 

This is the hidden content, please

• Sign In
• or
• Sign Up

“Consumers need to understand that the cavalry isn’t coming anytime soon, so the best thing you can do is take things into your own hands when it comes to lowering credit card interest rates,” said Matt Schulz, chief credit analyst at LendingTree.

Try calling your card issuer to ask for a lower rate, consolidating and paying off high-interest credit cards with a lower-interest personal loan or switching to an interest-free balance transfer credit card, Schulz advised.

Mortgage rates

Although 15- and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.

The average rate for a 30-year, fixed-rate mortgage is

This is the hidden content, please

• Sign In
• or
• Sign Up

“Going forward, mortgage rates will likely continue to fluctuate and it’s impossible to say for certain where they’ll end up,” noted Jacob Channel, senior economist at LendingTree. “That said, there’s a good chance that we’re going to need to get used to rates above 7% again, at least until we start getting better economic news.”

Auto loans

Even though 

This is the hidden content, please

• Sign In
• or
• Sign Up

The average rate on a five-year new car loan is now more than 7%, up from 4% in March 2022, and that’s not likely to change, according to Ivan Drury, Edmunds’ director of insights.

“Until we hit summer selldown months in the latter half of the third quarter, we should expect rates to remain relatively static during the foreseeable future,” Drury said.

However, competition between lenders and more incentives in the market lately have started to take some of the edge off the cost of buying a car, he added.

Student loans

This is the hidden content, please

• Sign In
• or
• Sign Up

Private student loans tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means those borrowers are already paying more in interest. How much more, however, varies with the benchmark.

Savings rates

While the central bank has no direct influence on ******** rates, the yields tend to be correlated to changes in the target federal funds rate.

As a result, top-yielding online

This is the hidden content, please

• Sign In
• or
• Sign Up

“Savers are sitting back and enjoying the best environment they’ve seen in more than 15 years,” McBride said.

Currently, top-yielding one-year certificates of ******** pay over 5.3%, as good as a high-yield savings account.

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

Central banking,Inflation,Federal Reserve System,Interest Rates,Economic events,Banks,Prices,Personal finance,Investment strategy,Personal saving,Personal loans,Mortgages,U.S. Economy,Credit cards,Auto loans,business news
#means

This is the hidden content, please

• Sign In
• or
• Sign Up