Forget the fact revised 1Q estimates show the economy shrank by 2.9% instead of 1%, which is a disaster. Fed Reserve Bank-St Louis President James Bullard sees raising the benchmark rate, which is currently at 0.0-0.25%. What this means in English is this: Those of you who have variable credit card interest rates are in trouble. Your variable interest rate is tied to the benchmark rate, also called the federal funds target rate. The US Prime rate is currently at 3.25%. The general rule is the US Prime rate = the Fed funds target rate + 3%. If you have a variable interest rate of 12%, that means the card company added about 8.75% to the US Prime rate to get your interest rate. Your interest rate will rise and fall according to the fluctuation in the benchmark rate, but never go below your hypothetical 12% in my example. If the benchmark rate rises, so do your interest rates. Every one of them that are variable will rise. Can you afford it? Thats why my family will be debt-free by the end of December. Im not going to mess with this interest crap anymore. Its personal finance 101, folks. Get used to it. - Robert Thomas Jr. Robert, were working on that ourselves... :)
Posted on: Thu, 26 Jun 2014 21:17:59 +0000