Savings and Credit, an Interest Rate Round-up

On Tuesday, the Federal Open Market Committee will meet to discuss the outlook of the benchmark interest rate in the coming months. Any dissent among the ten members to Chairman Ben Bernanke’s statements that rates “will remain low”, may change the Fed’s policy going forward. Stay tuned here for updates on the meeting’s progress.

See this week’s interest rates from the Federal Reserve after the jump.
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Bank of America, Banking on Overdrafts?

Bank of America is going ahead with a new overdraft policy, announced Wednesday, intended to protect customers by avoiding account overdrafts. This action comes in advance of the Federal Reserve’s July 1 deadline for banks to comply with new opt-in overdraft regulation. Overdraft fees are a more than $100 million dollar business for banks, so a large decline in profits is imminent. This begs the question, what are these institutions banking on to keep their revenues a float? For Bank of America, overdraft protection plans may be the new revenue earner. For consumers, they may not yet be as protected as hoped for.

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Ben Bernanke Testimony, Interest Rates to Remain Low

Federal Reserve Chairman Ben Bernanke says that although the federal funds rate will remain low, facilities created by the Federal Reserve to aid the U.S. economy through a recession will be closed.

Bernanke presented his Semiannual Monetary Report to the Congress on Wednesday. The chairman’s statements indicated that the Federal Reserve will continue to, “normalize its lending to commercial banks through the discount window.”

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Time to Borrow: Consumer Credit Rebounds from 11-Month Decline

Confidence in the credit markets may be gaining momentum, as the numbers show that American consumers are borrowing again.

According to the Federal Reserve, the 11 month decrease in consumer borrowing has come to a halt this month. While analysts projected total consumer borrowing to drop by $9 billion dollars, actual borrowing on credit cards fell by $8.5 billion and other forms of borrowing, including loans, increased by $6.8 billion.

Students and small businesses are primarily causing this shift in borrowing trends. For these groups now is the time to borrow and take advantage of financial resources available to them.

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