You may have heard of the Federal Reserve Bank raising or lowering the interest rates. Incase of interest rates everything is relative. Most of the rates that consumers pay are interrelated. The prime lending rates to the overnight loans offered by banks are all pegged.
The time period of the loans play a big role. Most of the shorter term loans are pegged to most of the interest rates in the country. The Fed Funds target rate is 5.25%, in late October the effective daily Fed Funds fluctuated from 5.23% - 5.26%
The Fed Fund rates are used as a benchmark by banks to decide on their prime lending rates. The current prime rate is 8.25%.The prime rate is important as it is used to set rates for credit card and home equity loans. The rate that is charged to the consumers is higher than the prime rate.
