Coronavirus, the Fed and personal loan rates
The Fed is slashing interest rates to give the economy some juice as the growing coronavirus crisis shuts down schools, theaters, theme parks and other places where people gather. Flights, cruises, conferences and sporting events are being canceled, including college basketball's "March Madness" tournament.
The central bank's rate cuts have an influence on borrowing costs throughout the economy, including the rates on personal loans.
You can find your very best rate by using a site that allows you to compare loans from multiple lenders — and don't be surprised if you come across a rate much better than 5%.
That's because personal loan rates have ups and downs and follow general interest rate trends that are usually set in motion by the Fed.
Why personal loan rates are likely to fall
The Fed's own data shows that when the central bank was using sky-high interest rates to battle steep inflation in the early 1980s, the average rate on personal loans went as high as a jaw-dropping 19.21%.
Now that the Fed is taking a hacksaw to interest rates, you can expect some lenders to bring down their personal loan rates.
Federal Reserve rate cuts have an even more direct effect on credit card interest rates, and they've been coming down. But card rates remain much steeper than the lowest rates on personal loans.
The average APR on a credit card is 14.87%, according to the Fed's most current research, so you can shrink your interest costs by rolling your credit card balances into a debt consolidation personal loan.
Federal Reserve policymakers took emergency action in early March to cut a key interest rate by one-half of one percentage point — the biggest rate reduction since the financial crisis in 2008.
The Fed has a mid-March meeting coming up and is widely expected to make an even deeper cut. Many economists are betting policymakers will take their rate all the way down to zero, either this month or within the coming months.
That would have a ricochet effect that would further drag down other interest rates throughout the economy, including the rates on personal loan. So, if a low-interest personal loan would help you, [shop around and find the very best rate] out there. You might be surprised what you'll turn up.