Interest rates determine the amount lenders charge borrowers for debts such as cash, houses, and even cars. Interest rates are presented as annual percentages of the loan amount and serve as compensation for the incurred risk.
Although central banks determine interest rates, other lending institutions can adjust loan and mortgage costs to their business needs. Demand for treasury bonds and notes also impacts fixed and long-term interest rates. Another factor is inflation – lenders impose high interest rates to cover the future decline of purchasing power.
Why Interest Rates Matter
From investors to borrowers, interest rates affect various market players. But even if you don’t have assets or debts, you still feel the effects in your household or company. For starters, interest rates impact business planning. When they rise, companies find it harder to repay debts, affecting their profits and financial future.
You also encounter cash flow issues. Since most proceeds go to loan contributions, you have to delay expansion and investment plans. Consumer-based enterprises may also register lower sales because customers would rather save than spend excess cash. However, interest hikes aren’t all bad–when rates increase, the Fed is confident about a robust economy.
Where to Find Current Interest Rates
Whether you’re buying a house or looking for a personal or business savings account, you need to pay attention to interest rates. Here’s where to find up-to-interest information.
The Federal Reserve Website
The Federal Open Market Committee (FOMC) convenes eight times per year to set the Federal Funds rate. Although this rate controls borrowing between financial institutions, it also affects consumers. Rising interest rates come with a higher cost of debt, reducing borrowing and consumer demand. On the other hand, people borrow, invest, and spend more when rates fall.
Remember, the Fed Funds rate isn’t a specific number – the FOMC issues a target figure to control monetary policy. Ordinarily, financial institutions determine actual interest rates through negotiations. You can use the Fed’s website to find current rates.
Bank Websites
Lenders publish interest rates on their websites. However, these rates aren’t always displayed on the homepage. Take the case of U.S. Bank: To view interest rates, visit the product page, select a product (like checking accounts) and you’ll be able to find applicable rates for the chosen product. A ZIP code might also be necessary to access your region’s interest rates. Note that online banks offer better rates and lower fees than traditional institutions. That’s because they don’t spend too much on staff and physical branches.
Consumer Financial Protection Bureau (CFPB)
The agency’s main role is protecting consumers and ensuring compliance with financial laws. Besides receiving complaints and eliminating unfair business practices, the CFPB monitors financial markets and promotes consumer education. The bureau also offers resources to track your income, debt, and financial goals. For example, homebuyers have a tool to compare mortgage rates to their loan type and credit score.
Aggregation Sites
These websites collect financial data from different sources and present it as consumable information. While some websites rely on bots to find financial data, others have editors to manually input the figures. There are numerous sites out there where you can find rate information, including (but not limited to):
- NerdWallet
- Bankrate
- MarketWatch
- The Motley Fool
- LendingTree
Identifying the best interest rates is one way to take charge of your finances. You can also secure your future by budgeting, saving, and increasing your income sources.
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