topic Re: Federal Reserve Rate Change in Credit Cards

Federal Reserve Rate Change

Anonymous — Fri, 22 Dec 2017 22:26:51 GMT

As we know the Federal Reserve increase the rate by 0.25% in December 2017 and my Citi Card Apr Purchases and Cash increased 0.25% on the statement that cut 12-20-17. Sure wouldn't want any lender to miss a chance to get more interest. Funny thing, I don't ever pay interest and if I did it would be on my fixed rate local bank that is 7.9% Purchases and Cash. Most of the major cards I see posted around the financials today seem to run 14.99% to 19.99+% so it might as well be 24.99% as it is way too much and negates any rewards a person might earn.

As an add ... the Federal Reserve is quoted as looking towards a possible three rate adjustments during 2018 which other posters already pointed out.

Re: Federal Reserve Rate Change

MrDisco99 — Fri, 22 Dec 2017 17:18:34 GMT

Are there any cards out there anymore that offer rates that low?

Re: Federal Reserve Rate Change

CreditCuriosity — Fri, 22 Dec 2017 17:22:00 GMT

Yes several CU's offer fixed rate CC's although most aren't rewards. Look for themanwhocan post as he lists alot of the CU/banks (mainly CU's i believe) with low fixed rate CC's. Although obviously Fixed rates can vary if several rate hikes happen and they end up losing their arse as a result of it.

Re: Federal Reserve Rate Change

CreditMagic7 — Fri, 22 Dec 2017 20:18:52 GMT

So is there any concensus to if this is a last hike for many months or can we expect a continuing upward climb and frequently.

My gut tells me the new just passed tax bill will sort of keep this trend actively on the climb but i'm no economist to suggest any accuracy in that.

Re: Federal Reserve Rate Change

Anonymous — Fri, 22 Dec 2017 20:28:54 GMT

I love it; the Prime Rate is up 1.25% now; yet besides Alliant CU which banks/CU's have actually raised savings rates....SMH.

Re: Federal Reserve Rate Change

Anonymous — Fri, 22 Dec 2017 20:30:36 GMT

@CreditMagic7 wrote:
So is there any concensus to if this is a last hike for many months or can we expect a continuing upward climb and frequently.

My gut tells me the new just passed tax bill will sort of keep this trend actively on the climb but i'm no economist to suggest any accuracy in that.

As long as the economy continues to do well we will continue to see Prime Rate increases. If you want some scary reading, check out the Prime Rates of the 1980s LOL.

Re: Federal Reserve Rate Change

galahad15 — Fri, 22 Dec 2017 20:31:24 GMT

@CreditCuriousity wrote:
Yes several CU's offer fixed rate CC's although most aren't rewards. Look for themanwhocan post as he lists alot of the CU/banks (mainly CU's i believe) with low fixed rate CC's. Although obviously Fixed rates can vary if several rate hikes happen and they end up losing their arse as a result of it.

Certainly very true, although for a fixed-rate card, any existing balances will remain at their pre-increase APR until they are paid off in full IIRC. One of the advantanges of fixed rate cards: rate increases are not retroactive to existing balances.

Re: Federal Reserve Rate Change

CreditCuriosity — Fri, 22 Dec 2017 20:32:33 GMT

@CreditMagic7 wrote:
So is there any concensus to if this is a last hike for many months or can we expect a continuing upward climb and frequently.

My gut tells me the new just passed tax bill will sort of keep this trend actively on the climb but i'm no economist to suggest any accuracy in that.

IMO rates will continue to raise.. Expect 3 next year especially with a new Fed Chair. They don't want inflation getting too squirly and rates have been low way to long (unless you are the borrower of course)

Re: Federal Reserve Rate Change

CreditCuriosity — Fri, 22 Dec 2017 20:33:27 GMT

@Anonymous wrote:
I love it; the Prime Rate is up 1.25% now; yet besides Alliant CU which banks/CU's have actually raised savings rates....SMH.

Ya you think there would be more of a correlation, but of course it is all in banks favor however you cut it. Poor retired old people

Re: Federal Reserve Rate Change

Anonymous — Fri, 22 Dec 2017 20:33:37 GMT

I'm curious about the mortgage side of things. I remember months ago watching the news and there was a strong correlation between interest rate hike and a sharp decline in mortgage applications.

They basically said that Americans have gotten used to lower rate mortgages just like they have gotten used to deep discounted merchandise during the holidays during the great recession. The correlation here, is that unless shoppers see deep discounts they won't buy. Unless home loan borrowers continue to see relatively same mortgage rates, they won't borrow.

I hope that is true and isn't just some talking heads perspective. At the time I saw the news report it made sense to me. That 6% and up mortgages are a thing of the past.

Re: Federal Reserve Rate Change

CreditCuriosity — Fri, 22 Dec 2017 20:34:31 GMT

@Anonymous wrote:
@CreditMagic7 wrote:
So is there any concensus to if this is a last hike for many months or can we expect a continuing upward climb and frequently.

My gut tells me the new just passed tax bill will sort of keep this trend actively on the climb but i'm no economist to suggest any accuracy in that.
As long as the economy continues to do well we will continue to see Prime Rate increases. If you want some scary reading, check out the Prime Rates of the 1980s LOL.

Yep not uncommon for mortages to be in 15+% range with great credit!

Re: Federal Reserve Rate Change

CreditCuriosity — Fri, 22 Dec 2017 20:41:43 GMT

@Anonymous wrote:
I'm curious about the mortgage side of things. I remember months ago watching the news and there was a strong correlation between interest rate hike and a sharp decline in mortgage applications.

They basically said that Americans have gotten used to lower rate mortgages just like they have gotten used to deep discounted merchandise during the holidays during the great recession. The correlation here, is that unless shoppers see deep discounts they won't buy. Unless home loan borrowers continue to see relatively same mortgage rates, they won't borrow.

I hope that is true and isn't just some talking heads perspective. At the time I saw the news report it made sense to me. That 6% and up mortgages are a thing of the past.

Yes as Fed rate hikes go up meaning interest goes rates go up you will see a decrease in the amount of houses selling as a result the prices of houses should fall as well as supply/demand. Bad for people that own houses and possibly good for people that want to buy them although higher interest for buyers

Re: Federal Reserve Rate Change

GeorgiaBulldog — Fri, 22 Dec 2017 21:09:13 GMT

@Anonymous wrote:
I love it; the Prime Rate is up 1.25% now; yet besides Alliant CU which banks/CU's have actually raised savings rates....SMH.

Along with Alliant, Discover, American Express, Barclays, Ally, and Synchrony all have savings accounts in the 1.2-1.3% range.

Re: Federal Reserve Rate Change

DaveInAZ — Fri, 22 Dec 2017 21:20:58 GMT

@Anonymous wrote:
As we know the Federal Reserve increase the rate by 0.25% in December 2017 and my Citi Card Apr Purchases and Cash increased 0.25% on the statement that cut 12-20-17. Sure wouldn't want any lender to miss a chance to get more interest. Funny thing, I don't ever pay interest and if I did it would be on my fixed rate local bank that is 7.9% Purchases and Cash. Most of the major cards I see posted around the financials today seem to run 14.99% to 19.99+% so it might as well be 24.99% as it is way too much and negates any rewards a person might earn.

The Federal Reserve raised the Federal Funds Rate by .25% in earlier this month, from 1.25% to 1.5%. That's the rate the Fed & banks loan reserve/excess funds to one another. It shouldn't have raised credit card or other non-mortgage consumer loan rates as most are based on the Prime Rate + percentage points. None of my CCs raised my rate, and even my HELOC remained the same as it's based on Prime +0%.

The Fed Funds Rate increase does portend further increases in the Prime Rate in 2018, which will increase most CC interest rates.

Re: Federal Reserve Rate Change

CreditCuriosity — Fri, 22 Dec 2017 21:33:13 GMT

@DaveInAZ wrote:
@Anonymous wrote:
As we know the Federal Reserve increase the rate by 0.25% in December 2017 and my Citi Card Apr Purchases and Cash increased 0.25% on the statement that cut 12-20-17. Sure wouldn't want any lender to miss a chance to get more interest. Funny thing, I don't ever pay interest and if I did it would be on my fixed rate local bank that is 7.9% Purchases and Cash. Most of the major cards I see posted around the financials today seem to run 14.99% to 19.99+% so it might as well be 24.99% as it is way too much and negates any rewards a person might earn.
The Federal Reserve raised the Federal Funds Rate by .25% in earlier this month, from 1.25% to 1.5%. That's the rate the Fed & banks loan reserve/excess funds to one another. It shouldn't have raised credit card or other non-mortgage consumer loan rates as most are based on the Prime Rate + percentage points. None of my CCs raised my rate, and even my HELOC remained the same as it's based on Prime +0%.

The Fed Funds Rate increase does portend further increases in the Prime Rate in 2018, which will increase most CC interest rates.

strange already seen a few of mine raise by .25%

Re: Federal Reserve Rate Change

MrDisco99 — Fri, 22 Dec 2017 22:14:55 GMT

@DaveInAZ wrote:
@Anonymous wrote:
As we know the Federal Reserve increase the rate by 0.25% in December 2017 and my Citi Card Apr Purchases and Cash increased 0.25% on the statement that cut 12-20-17. Sure wouldn't want any lender to miss a chance to get more interest. Funny thing, I don't ever pay interest and if I did it would be on my fixed rate local bank that is 7.9% Purchases and Cash. Most of the major cards I see posted around the financials today seem to run 14.99% to 19.99+% so it might as well be 24.99% as it is way too much and negates any rewards a person might earn.
The Federal Reserve raised the Federal Funds Rate by .25% in earlier this month, from 1.25% to 1.5%. That's the rate the Fed & banks loan reserve/excess funds to one another. It shouldn't have raised credit card or other non-mortgage consumer loan rates as most are based on the Prime Rate + percentage points. None of my CCs raised my rate, and even my HELOC remained the same as it's based on Prime +0%.

The Fed Funds Rate increase does portend further increases in the Prime Rate in 2018, which will increase most CC interest rates.

Prime rate definitely went up. I noticed rate hikes on my Amex and Citi statements.

Re: Federal Reserve Rate Change

Anonymous — Fri, 22 Dec 2017 22:32:35 GMT

@DaveInAZ wrote:
@Anonymous wrote:
As we know the Federal Reserve increase the rate by 0.25% in December 2017 and my Citi Card Apr Purchases and Cash increased 0.25% on the statement that cut 12-20-17. Sure wouldn't want any lender to miss a chance to get more interest. Funny thing, I don't ever pay interest and if I did it would be on my fixed rate local bank that is 7.9% Purchases and Cash. Most of the major cards I see posted around the financials today seem to run 14.99% to 19.99+% so it might as well be 24.99% as it is way too much and negates any rewards a person might earn.
The Federal Reserve raised the Federal Funds Rate by .25% in earlier this month, from 1.25% to 1.5%. That's the rate the Fed & banks loan reserve/excess funds to one another. It shouldn't have raised credit card or other non-mortgage consumer loan rates as most are based on the Prime Rate + percentage points. None of my CCs raised my rate, and even my HELOC remained the same as it's based on Prime +0%.

The Fed Funds Rate increase does portend further increases in the Prime Rate in 2018, which will increase most CC interest rates.

Most credit cards today include the language for variable rates and generally tie it to the Federal Funds Rate (some used to use the LIBOR Rate) as published in the Wall Street Journal (or other Financial Source identified in the credit card terms and conditions) on a certain date monthly or quarterly (or as identified in the credit card terms and conditions). Yes, there are a few exceptions but not many. DaveInAZ how you have not had rate changes must be tied to having Prime + 0% and it certainly would not be the norm (note it is early and some of our credit card lenders are not as prompt about installing rate increases or decreases as others so you will likely see changes as some of the credit cards you have listed in your profile do change rates - have some of the same cards). On the other hand if I did not see rate changes I would not be "poking the bear".

Re: Federal Reserve Rate Change

MrDisco99 — Fri, 22 Dec 2017 23:11:12 GMT

I just looked it up. The Prime Rate tracks the FFTR (top end of FFTR + 3). So an increase in the FFTR automatically means an increase in the Prime Rate.

On Dec. 14, the Prime Rate went from 4.25% to 4.50% as a result of the vote the day before to increase the FFTR.

http://www.fedprimerate.com

The more you know...

Re: Federal Reserve Rate Change

Anonymous — Fri, 22 Dec 2017 23:33:38 GMT

@DaveInAZ wrote:
@Anonymous wrote:
As we know the Federal Reserve increase the rate by 0.25% in December 2017 and my Citi Card Apr Purchases and Cash increased 0.25% on the statement that cut 12-20-17. Sure wouldn't want any lender to miss a chance to get more interest. Funny thing, I don't ever pay interest and if I did it would be on my fixed rate local bank that is 7.9% Purchases and Cash. Most of the major cards I see posted around the financials today seem to run 14.99% to 19.99+% so it might as well be 24.99% as it is way too much and negates any rewards a person might earn.
The Federal Reserve raised the Federal Funds Rate by .25% in earlier this month, from 1.25% to 1.5%. That's the rate the Fed & banks loan reserve/excess funds to one another. It shouldn't have raised credit card or other non-mortgage consumer loan rates as most are based on the Prime Rate + percentage points. None of my CCs raised my rate, and even my HELOC remained the same as it's based on Prime +0%.

The Fed Funds Rate increase does portend further increases in the Prime Rate in 2018, which will increase most CC interest rates.

Read the terms and conditions of your card(s). They're based on the prime rate + ___ % (variable). Variable means it fluctuates over time, unless you have one of those scarce cards with a fixed rate.

Re: Federal Reserve Rate Change

DaveInAZ — Fri, 22 Dec 2017 23:59:53 GMT

@Anonymous wrote:

Read the terms and conditions of your card(s). They're based on the prime rate + ___ % (variable). Variable means it fluctuates over time, unless you have one of those scarce cards with a fixed rate.

Yes, of course. The only fixed rate I have is my car loan. Just saying none of my CC rate have increased yet due to the 12/13 fed rate increase. Amex didn't change, even BoA didn't change, yet. Chase and Citi seem to have been the fastest to jump at the chance to stick it to their customers who carry a balance. Rates (variable) on my CCs range from 11.25% for a local CU to that no fee Merrick Bank I hang onto at 26.45%. They all say Total Interest 2017: $0.00. They all can go ahead an flucuate over time, it won't cost me anything.