Fed rate hike this week to hit millions of borrowers

[Gunnar419]

It's scary how even a small change can affect borrowers. The statistics cited here are disturbing.

What I'd also like to know is why is it that every time the Fed jumps its rates, all our cc interest rates immediately take a leap, but the interest rates banks pay us for our savings accounts and interest bearing checking accounts don't budge? I'm not thinking of fixed rate CD, either, just regular accounts. Banks take but do not give. Why?

[Anonymous]

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@gdale6 wrote:

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@Anonymous wrote:

Yes, many credit products that are variable rate in nature will creep up likely 1/4% in the next few weeks. Those with Fixed Rates may or may not see rate increses. My Visa Card with a small regional bank went from 6.9% to 7.9% Fixed. That is their first rate change since at least 2006.

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Make sure they raised that in accordance with their T&Cs. My fixed CU rate card cannot be raised for any reason except default. Fixed means fixed not variable as the wind blows.

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Good point. Most fixed have to follow the current card rules and if my memory is right there may be a 45 day notice provision. Nothing prevents a lender from adjusting fixed rate card (as you mentioned their T&C Controls) but they are able to adjust. In looking back, fixed rate tend not to adjust every time there is a variable rate increase rate increase. As I wrote, my bank had not adjusted for over eleven years and some members on this board have had unadjusted fixed rates. In 2008 Capital One had my Cap1 Business Card at 7.9% fixed and then changed the rate to 23.9% and basically said if I didn't like the new rate too bad. I closed eight Cap1 Accountsand never looked back. Citi has adjusted my low rates before but they gave me 45 days notice so there sure is a variety of methods. As to whether Credit Unions have to follow the same exact rules ... don't know?!

[Glen_M]

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@Gunnar419 wrote:

It's scary how even a small change can affect borrowers. The statistics cited here are disturbing.

What I'd also like to know is why is it that every time the Fed jumps its rates, all our cc interest rates immediately take a leap, but the interest rates banks pay us for our savings accounts and interest bearing checking accounts don't budge? I'm not thinking of fixed rate CD, either, just regular accounts. Banks take but do not give. Why?

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Because they're a for-profit business, and they don't need to pay anything to keep their customers (who are mostly financially illiterate).  In fact, they'll probably continue to come up with more fees to charge you.

[Anonymous]

Some of my interest bearing accounts budged. Try GS Bank...

[mitchblue]

This is indirectly related to Trump.. Fed's stayed status quo for 7 years because a dem was in office. Those times are over. Expect another increase at the end of the year as well..

[Gunnar419]

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@Glen_M wrote:

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@Gunnar419 wrote:

It's scary how even a small change can affect borrowers. The statistics cited here are disturbing.

What I'd also like to know is why is it that every time the Fed jumps its rates, all our cc interest rates immediately take a leap, but the interest rates banks pay us for our savings accounts and interest bearing checking accounts don't budge? I'm not thinking of fixed rate CD, either, just regular accounts. Banks take but do not give. Why?

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Because they're a for-profit business, and they don't need to pay anything to keep their customers (who are mostly financially illiterate).  In fact, they'll probably continue to come up with more fees to charge you.

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It's no doubt true that they'll come up with more fees, and true that the American public shows a lot of financial illiteracy, but a for profit business in a less government regulated environment might have incentive to raise rates paid for savings accounts to attract more business away from competitors. I think it's a mistake to equate for profit with unbendingly greedy. It's also a mistake to think of banks as operators in a free market. They are all more beholden to regulators than they are to customers.

I am personally not going to switch banks because all the government required paperwork and procedures are so painful and stupid. I don't have much in savings anyway. I just notice that the rates we pay go up a lot faster than the rates we earn.

[Gunnar419]

zipperhead, thanks for the tip.

mitchblue, I have heard that also. They say they're raising rates because the economy is now so robust, but they've been saying the economy is robust for years. If that was true, or was even an effective propaganda line, why didn't they start raising rates much sooner? I don't care about Trump, but I don't trust the Fed. Not. At. All.

[gdale6]

Lets all please keep this on track and the politics out of it as bringing the political into it would be a violation of our TOS. Thanks for everyones understanding on this.

[pipeguy]

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@mitchblue wrote:

This is indirectly related to Trump.. Fed's stayed status quo for 7 years because a dem was in office. Those times are over. Expect another increase at the end of the year as well..

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I disagree that its related to "Trump" in any way other than a change in the administration, as its related to the Fed artificially keeping rates low to help the economic reports and outlook. That was the point of my mentioning the interest we taxpayers pay of the national debt which goes from $240 billion to $315 billion, not counting the laterst increase (thats $1000 per man, women and child living in the US per year).

"Politics" do play a part of what the Fed does (they say otherwise), which is one reason that there is a bill in every Congress to audit the Fed - but it never passes or even gets a vote. Economic reports, including growth and employment were presented with a certain political slant such as fudging for economic growth and under reporting true unenployment figures. With the change in administration the fed seems to be doing quickly what it should have done over the past 4 years at least, however they continue to "fudge" the reasons as "too hot an economy and fear  of inflation". Only thing I see as hot is the stock market as a forward looking factor, but its sure not true in middle America. 

This could be a very long post concerning how to tweak economic factors, but the simple fact is that 0% fed funds are a bad idea and to hold them at near zero for 6+ years is a mistake - the fed seems to be making a correction, which won't be in our favor as consumers or in servicing the national debt. 

Edit/add: Mods, this post is NOT meant to be political but more so to address the role that the Fed has interacting with economic factors (you know I'm very careful to address the issue, not the politics of an issue directly. Feel free to delete this post if it crosses the line.  

[Revelate]

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@pipeguy wrote:

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@mitchblue wrote:

This is indirectly related to Trump.. Fed's stayed status quo for 7 years because a dem was in office. Those times are over. Expect another increase at the end of the year as well..

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I disagree that its related to "Trump" in any way other than a change in the administration, as its related to the Fed artificially keeping rates low to help the economic reports and outlook. That was the point of my mentioning the interest we taxpayers pay of the national debt which goes from $240 billion to $315 billion, not counting the laterst increase (thats $1000 per man, women and child living in the US per year).

"Politics" do play a part of what the Fed does (they say otherwise), which is one reason that there is a bill in every Congress to audit the Fed - but it never passes or even gets a vote. Economic reports, including growth and employment were presented with a certain political slant such as fudging for economic growth and under reporting true unenployment figures. With the change in administration the fed seems to be doing quickly what it should have done over the past 4 years at least, however they continue to "fudge" the reasons as "too hot an economy and fear  of inflation". Only thing I see as hot is the stock market as a forward looking factor, but its sure not true in middle America. 

This could be a very long post concerning how to tweak economic factors, but the simple fact is that 0% fed funds are a bad idea and to hold them at near zero for 6+ years is a mistake - the fed seems to be making a correction, which won't be in our favor as consumers or in servicing the national debt. 

Edit/add: Mods, this post is NOT meant to be political but more so to address the role that the Fed has interacting with economic factors (you know I'm very careful to address the issue, not the politics of an issue directly. Feel free to delete this post if it crosses the line.  

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+1

I know we have fake news and alternative history making headlines in the media these days, but rates were raised 12/15 and 12/16 too.

Curiosity question: in your estimation the stock market gains aren't hitting middle America?  Slew of money in ETF's had to come from somewhere?