Prime rate increases to 7.75%
Ben Bernanke, the new Chairman of the Federal Reserve, followed in Greenspan's footsteps yesterday by raising the federal funds rate by .25% to 4.75%. This increase led to the prime rate being increased from 7.5% to 7.75%. What does all this financial mumbo-jumbo mean to you?
Each time the Federal Reserve increases the federal fund interest rate, interest rates on credit services tied directly to the prime rate also increase. Mainly, credit card interest rates and home equity lines of credit interest rates are impacted by these increases. Many credit card issuers set their APR's as "prime plus," as in the prime rate plus a set percentage. Check your credit card accounts online in the next few days. You'll probably see that your APR's have increased along with the prime rate.
Do you think interest rates will continue to rise? How will interest rate changes impact your finances? Share your feedback in the comments section below.
Of course! Interest rates are going to continue to rise. The only relief we can get is to get out of debt as quickly as possible. That is my mission for 2006.
Posted by: supermom_in_ny | March 30, 2006 at 08:31 AM
That's a great goal! How are you tracking your progress?
Posted by: EmilyPeters | March 30, 2006 at 08:42 AM
The only people worried about the interest rates rising are those in debt. I haven't worried about interest rates in a while now. Talk about freedom.
Posted by: Emma | March 30, 2006 at 06:59 PM
Fed Funds traders are betting on another 25 basis point hike after the FOMC meets on May 10. If the economy continues to flourish in the second quarter, then you can bet your bottom dollar that another interest rate hike is coming.
Posted by: Prime Rate | March 31, 2006 at 04:56 PM