Coronavirus, the Fed and personal loan rates
The Fed has slashed interest rates all the way down to near zero to give the economy some juice as the worsening coronavirus crisis shuts down restaurants, bars, schools, theaters, theme parks and other places where people gather.
Financial markets have crashed, and 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.
Fiona is a handy website that will let you quickly compare rates from multiple lenders at once, with no hidden fees. You can borrow as little as $1,000 or as much as $100,000.
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. Then, less than two weeks later, they pushed the rate down again, this time by one full percentage point to close to zero, matching 2008's all-time low.
That should have a ricochet effect that will further drag down other interest rates throughout the economy, including the rates on personal loans. 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.