What Happens To Your Credit Card Payments When The Federal Reserve Lowers Interest Rates

At the end of July 2019, the Federal Reserve announced that they would be lowering the federal funds rate from 2.25% to 2.0%. Whether you’re saving or paying off debt, the new Federal Reserve rate will influence your approach. This is the first time that the Fed has lowered the federal funds rate since the Great Recession. The rationale behind lowering the federal reserve rate is to encourage consumers to take out more loans and buy more because it is essentially cheaper to borrow and carry debt. Despite the small drop, the change in rate can have a big impact on your finances.

Banks, lenders and even credit card companies determine the interest rates that they offer based on what the Federal Reserve does. Therefore, despite personal factors like credit history, the federal funds rate plays a significant role in your personal interest rate.

Credit cards either have a fixed or variable rate. A fixed rate is like not to change under a rate-cut. Credit cards that have a variable rate are linked to the Federal Reserve’s benchmark rate. Eventually, these interest rates should drop by the same quarter percentage as the Federal Reserve interest rate.
However, it is important to acknowledge that credit card issuers often have hidden statements in their agreements, allowing the highest prime rate in effect during the preceding 60-day period. Even if your rate is fixed, credit card companies can change their interest rates whenever, as long as they provide notification in advance.

According to Bankrate.com, credit card rates now stand at a record high of 17.85%, on average and almost half of all cardholders do not pay their credit card bill in full each month. Therefore, a lower monthly credit card rate should be beneficial to many. Another option for those trying to eliminate debt is to shop around for zero-interest balance transfer offer so that you can more quickly pay off your credit card debt. Cardholders can also directly reach out to their issuer to request a break on interest rates.

Overall, credit card holders should expect to see lower monthly payments over time under the new federal rate cut, making now the perfect time to attempt to pay off credit card debt.

Tips for Small Business Owners Who Need to Borrow Money for Financing a New Building

In a competitive business world, starting or expanding a business is risky yet rewarding if done correctly. When it comes to financing a new commercial property, lenders will consider many factors, such as your financial strength, the size of the loan, the length of term you desire, and the financial condition of your company. With strict criteria and a national credit crisis, it can be difficult to obtain a loan from your bank. Here are some options for small business owners who need to borrow money to finance a new building.

1. Get an SBA loan
Loans guaranteed by the U.S. Small Business Association have become a hot commodity, as banks are reluctant to take chances with their own money in times of credit crisis. SBA-backed loans are open to any small business; however, there are certain criteria:

• The SBA cannot guarantee loans to businesses that can obtain the money they need on their own, meaning you must first be denied a loan from your own bank before you can apply for an SBA loan.
• You must meet the government’s definition of a small business within your industry.
• Depending on the type of loan, your business may need to meet other criteria.
• After your business has met all the qualifications, you must apply for a commercial loan from a financial company that provides SBA loans. The SBA does not process loans directly.

2. Get a microloan
Despite a lack of credit history and inability to obtain a bank loan, you will still be able to borrow money from a microlender. Microloans are small business loans ranging from $500 to $35,000. Microlenders offer small loan sizes, require less documentation, and have more flexible criteria. However, they do offer slightly higher interest rates than banks. Microloans are great for both startup entrepreneurs and entrepreneurs in an existing business who need to secure capital for new equipment or new establishments.

3. Keep track of your expenses from the start and keep them low
While income grabs everyone’s initial attention, it is important to keep track of your expenses from the start. When securing a loan, your expense liabilities will need to be shared. There are various free or minimal cost business software options that allow you to keep track of your expenses and necessary information. You should also save or take photos of all receipts and invoices. It is easier to keep track of your expenses along the way, rather than letting it build up over extended periods of time. For larger expenses such as rent, payrolls, taxes, interest, cost materials, debts, and utilities, it is crucial to plan in advance. It is also important to keep your initial expenses as low as possible. You do not need the most elaborate materials for your new office. With growth and success, these perks can be acquired.

4. Do not forget about hidden costs
There are many hidden costs that come with running a business such as insurance, taxes, permits and licenses, and legal fees. And of course, there’s always an additional expense at every corner. Make sure to factor these costs and unexpected expenses into your budget and be prepared for mishaps and emergencies.