Latest news with #CMEGroup
CBS News
7 hours ago
- Business
- CBS News
Will credit card rates fall after this week's Fed meeting?
The Federal Reserve's July meeting is underway with an announcement on monetary policy and interest rate cuts expected on Wednesday. And tension around that announcement is elevated now. Thanks to a combination of increased political pressure, a cooler but still sticky inflation rate, and broader economic considerations, the Fed is contemplating cutting interest rates or keeping them frozen through the rest of the summer. With the central bank not meeting again until September, then, what does and doesn't happen after this week's Fed meeting will reverberate throughout the economy into August and beyond. This is an especially pressing concern for credit card users saddled with high-rate debt. While the average credit card interest rate is slightly down now, the difference is negligible, as it sits at 21.16% - just under a recent record 23% high. So, relief here is a top concern for card users. But will rates actually fall after this week's Fed meeting? And what should borrowers do if they don't? That's what we'll analyze below. Stuck with high-rate credit card debt? Explore your credit card debt forgiveness options here. In short, credit card interest rates are not expected to fall in the days and weeks following the July Fed meeting. That's due to multiple factors. For starters, a rate cut isn't anticipated for this week (the CME Group's FedWatch tool lists it around a 3% chance). So, if rates aren't cut, credit card rates are unlikely to be cut either. But the reasoning behind a pause in rates goes deeper. Credit card rates, while influenced by the Fed's benchmark rate, are also tied to the prime rate, which lenders use when providing credit or loans to borrowers. If that's high or frozen, a Fed rate cut will have a negligible impact on what card users are paying. And, even if the Fed were to cut rates and even if the prime rate were to be reduced, neither is likely to fall in any significant enough way to help reduce your credit card debt load. The next anticipated Fed rate cut (forecast, potentially, for September) is likely to be by a quarter of a point, resulting in marginal relief for borrowers. With the average credit card debt around $8,000 now, then, and the reality of compounding interest and limited (or no) immediate relief, then, what should borrowers do? Fortunately, there are multiple debt relief options available and worth exploring. Some applicable ones may be: Credit card debt forgiveness: Also known as debt settlement, this option can result in credit card balances being reduced by 30% to 50%. It will take multiple years for the debt to be forgiven, however, and some temporary credit score damage could be incurred, but if it's the difference between regaining your financial health or not, it could be worth it. Debt management programs: Often done with the help of a debt relief provider, these programs involve negotiating your interest rates with your creditors in hopes of a more affordable way toward paying down what you owe. You'll frequently send a single monthly payment to the servicer, who will then distribute those funds to your creditors as agreed to. Debt consolidation loans: While this technically involves taking on more debt, when done strategically, it can provide major relief. Debt consolidation loans, after all, are personal loans. And, right now, personal loan rates are averaging around 12% or are almost ten full percentage points below the average credit card rate. So, paying off your cards with the loan and then making a single, much more affordable payment to the loan instead could make sense now. Credit card interest rates are unlikely to fall after this week's Fed meeting nor are they expected to decline in any material way in the near future. Borrowers stuck with high-rate debt, then, should instead explore debt relief options ranging from credit card debt forgiveness to debt management programs to debt consolidation loans. There's likely a strategy and debt relief company that can properly assist you on the way toward fully regaining your financial health, regardless of what happens (or doesn't) with the Fed.
CBS News
7 hours ago
- Business
- CBS News
Is a $10,000 CD account worth opening this August? 3 reasons why it may be
Depositing money into a certificate of deposit (CD) account in recent years was an obvious choice. Not only were interest rates exponentially higher than they were at the start of the decade, but these accounts offered one of the few ways to grow and protect your money in an otherwise unpredictable economic environment. With inflation at its highest point in decades, some savers were able to lock in CD accounts with rates of 6% or 7%. Now, however, things are different. Inflation is under 3%, down from the over 9% it was in the summer of 2022. And multiple rate cuts were issued in the final months of 2024 with additional ones expected for the end of 2025. Is a CD account worth opening this August, then? And what about those savers considering a five-figure deposit? For many, a $10,000 CD account can still be valuable, even if opened in the coming weeks. Below, we'll explain why. Start by seeing how much more money you could be earning with a high-rate CD here. While a CD account may not be as advantageous as it once was, there are still some reasons why it could be worth opening this August, especially with a larger deposit. Here are three to consider now: Interest rates on the top CD accounts are no longer above the 5% range they were consistently found in a few years ago … but they're not exactly hovering around the 1% they were in 2020, either. Right now, savers can locate CD accounts with rates in the 4% to 4.50% range with ease, no matter the CD term length. That's $4 in interest earned for every $100 deposited, which will accumulate relatively quickly with a $10,000 deposit. That said, higher rates are usually more readily available with online accounts versus lenders with physical locations, but if you take the time to shop around, the return you earn could be well worth the extra effort. Get started with a high-rate CD account now. There's no Federal Reserve meeting to discuss monetary policy and interest rates in August. And while that may not be a benefit to borrowers, as any potential rate reductions will be delayed to September, it's a positive for savers as it gives them a bit more time to shop around to find a high-rate CD without having to worry about an unpredictable interest rate climate. Still, banks don't need to directly follow the Fed and if a September Fed rate cut becomes increasingly more likely, then they may start preemptively lowering the returns they offer on CD accounts as August comes to an end. So don't take too long to act, either. There's virtually no expectation that the Federal Reserve will reduce interest rates when its July meeting concludes this week (the CME Group's FedWatch tool has it listed at less than a 4% likelihood). But that changes significantly for September, with the chances of a rate cut then surging to more than 65%. And considering that the Fed cut rates by a larger-than-anticipated 50 basis points in its September 2024 meeting and the increased pressure to cut rates overall, this August could be the final time to lock in a high CD rate before cuts are issued again. Sure, CD rates aren't expected to plunge post-September, but if you can lock in a higher rate right now, why take the risk of securing a lower one this fall? For many savers, the answer to whether a $10,000 CD account is still worth opening this August is a resounding "yes." With rates on these accounts still elevated, additional time to shop around without the pressure of pending Fed rate action and the reality of interest rate cuts being issued this September, this August could be the smart time to take action. Just be sure, if you do, to pick a CD term that works for you, as early withdrawal penalties on a $10,000 CD account could be costly.
CNBC
15 hours ago
- Business
- CNBC
While the Fed kept its benchmark unchanged, here's what happened to consumer borrowing rates
When it meets this week, the Federal Reserve is widely expected to keep its key short-term interest rate at its current target range — where it has stayed for all of 2025. Futures market pricing is implying almost no chance of an interest rate cut this month, according to the CME Group's FedWatch gauge. In that case, the federal funds rate would remain unchanged in a range between 4.25% to 4.5%, where it has been since December. The Fed's benchmark sets what banks charge each other for overnight lending, but also has a trickle-down effect on many of the borrowing and savings rates consumers see in their daily lives. More from Personal Finance:Student loan forgiveness may soon be taxed againWhat the Fed's interest-rate decision could mean for your moneyHow to lower capital gains on your home sale as Trump eyes ending the tax From mortgage rates and auto loans to credit cards and savings accounts, here's a look at how those rates have moved over the first half of the year while the Fed held its benchmark steady. The trickle down from the Fed's benchmark interest rate appears most obvious in credit cards, although by the numbers it's a very slight change. The average rate for credit card balances had been steadily increasing since the Fed began raising rates in 2022 until it finally crested just below 21% last fall, according to Bankrate. Since then, rates have nudged downward and have been hovering around 20.1% for the first half of 2025. Auto loans have also seen very little movement in the first half of 2025, and 30-year fixed rate mortgages, whose rates are more closely tied to the yield on 10-year Treasurys, have hovered between 6.6% and 7.1% after hitting a low near 6% last fall, according to Freddie Mac. President Donald Trump has argued that maintaining a federal funds rate that is too high makes it harder for businesses and consumers to borrow, essentially pumping the brakes on economic growth and the housing market. Still, "there is no guarantee" that a rate cut would translate into lower borrowing costs for most Americans, according to Brett House, an economics professor at Columbia Business School. Some variable-rate loans, like credit cards, have a direct connection to the Fed's benchmark, while others, like mortgage rates, are more closely pegged to Treasury yields and the U.S. economy, he said. "It is entirely likely that cuts to the fed funds rate in the face of increasing inflation would push mortgage rates up, not down."
Forbes
a day ago
- Business
- Forbes
How Do Experts Predict Whether The Fed Will Change Interest Rates
WASHINGTON, DC - SEPTEMBER 18: Federal Reserve Chairman Jerome Powell speaks during a news ... More conference following the September meeting of the Federal Open Market Committee at the William McChesney Martin Jr. Federal Reserve Board Building on September 18, 2024 in Washington, DC. The Federal Reserve announced today that they will cut the central bank's benchmark interest rate by 50 basis points to a new range of 4.75%-5%. (Photo by) As the Federal Open Market Committee meets this week for the fifth time this year, many experts predict that the Fed will hold steady on interest rates. They will confidently say this on TV, social media, and across various news outlets. And more often than not, they're right. How is that possible? What do they know that we don't? Surprisingly, it's not a secret. In fact, the answer is public and free: the market will tell them. The CME Group FedWatch Tool Professional traders make bets on the direction of interest rates using futures contracts. Their trades reflect where they believe rates are headed. The CME Group compiles all this data and publishes it in their FedWatch tool. They've looked at where traders are putting their money and coming up with a prediction based on those trades. Since these contracts can close many months in the future, the FedWatch tool can show you what they imply in future meetings too. It's not restricted to just the next meeting. As of today, in looking at the chart for the July 30th meeting, interest rate traders believe there is a 97.4% chance the rate remains 425-450 basis points. There is a small 2.6% chance it is cut to 400-425 basis points. You can even look at the probabilities for the next dozen meetings: Screenshot of the conditional meeting probabilities from 7/30/2025 - 12/9/2026, taken on 7/28/2025. The predictive value of the tool gets lower the further you project into the future, but the trend is clear. Pundits will read this chart and conclude that they expect the Fed to lower rates three times in 2025. That's good news if you have variable rate loans but bad news if you're saving in a high yield savings account. Summary of Economic Projections Beyond market expectations, there's another important clue: The Fed's Summary of Economic Projections. The Fed produces this report four times a year. In 2025, that report is released after the March, June, September, and December meetings. The Summary of Economic Projections includes a dot plot that shows where the FOMC participants think rates will be in the future. This is the dot plot from the June report: Screenshot taken from Summary of Economic Projections, June 18, 2025 The participants, who set the rates, expect rates to be lower than they are today. As for when they will lower, this report doesn't go into that level of detail now would we expect the FOMC to telegraph its intentions so openly. Now that you're familiar with these two very important data points, you can make predictions and sound as confident as the pundits on television because you're using the same data they are.
Finextra
5 days ago
- Business
- Finextra
CME completes first phase of testing on Google Cloud
Trading venue CME Group has revealed more about its plan to introduce tokenisation services via its link up with Google Cloud 0 This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. Back in March, CME Group announced that it was extending its deal with Google Cloud to include a number of use cases involving tokenisation and wholesale payments. Four months on, the company has issued an update, stating that it has completed the first phase of integration and testing of Google Cloud Universal Ledger which is expected to be used for collateral, margin, settlement and fee payments. Speaking on a quarterly earnings call, CME's chief operaitng officer and global head of clearing said: "We've now entered the second phase of testing, focusing on settlement. We are very optimistic about our ability to bring solutions to market in 2026." Sprague added that it was too early to identify specific use cases. 'We're thinking about tokenizing cash and other noncash assets for our current ecosystem, not really looking at the clearing space to start."
