In the presence of higher inflation, which the United States is beginning to experience, lenders need to raise their rates in order to generate a return.
EL SEGUNDO, CA (PRWEB) November 08, 2012
Interest rates today are expected to remain at a low well into 2015, which directly influences consumers’ ability to earn decent returns on deposit accounts. Despite this reality, not many Americans truly comprehend how banks set interest rates and what factors play a role in how rates change.
Go Banking Rates analyzes how bank interest rates are affected, and uncovers the main reasons consumers see such a vast range of deposit and loan rates in the banking market.
One factor affecting interest rates today, according to Go Banking Rates, is inflation.
Fergus Hodgson, Director of Fiscal Policy Studies for the John Locke Foundation in North Carolina, shares why inflation makes a great deal of difference on consumer interest rates.
“Inflation, the devaluation of a currency expressed in higher price levels, is one of two underlying drivers of retail interest rates — the other is the activity of the Federal Reserve system,” explains Hodgson. “In the presence of higher inflation, which the United States is beginning to experience, lenders need to raise their rates in order to generate a return. Relatively speaking, the money they receive when paid back will be less valuable, which offsets the interest rate charged.”
While some of the factors affecting interest rates today are out of consumers’ immediate control, maintaining a clean line of credit and taking the initiative to shop around for the best bank interest rates in the area opens the door to interest rates on deposit and loan products that meet customers’ needs.
About Go Banking Rates
Go Banking Rates (GoBankingRates.com) a national website dedicated to connecting readers with the best interest rates on financial services nationwide, as well as informative personal finance content, news and tools. Go Banking Rates collects interest rate information from more than 4,000 U.S. banks and credit unions, making it the only online rates aggregator with the ability to provide the most comprehensive and authentic local interest rate information. Go Banking Rates also regularly publishes expert advice from personal finance professionals.
GoBankingRates.com belongs to a network of more than 1500 finance websites, including GoInsuranceRates.com and GoFreeCredit.com. These sites receive more than 2 million visits each month.
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Jaime Catmull, Director of Public Relations