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The offers that appear on this site are from companies that compensate us. This compensation may impact how and where products appear on this site, including, for example, the order in which they may appear within the listing categories. But this compensation does not influence the information we publish, or the reviews that you see on this site. We do not include the universe of companies or financial offers that may be available to you. SHARE: Bloomberg Creative/Getty Images November 02, 2022 Raija Haughn is an associate writer for Bankrate.com specializing in personal and home equity loans. She is passionate about helping people make financial decisions that will benefit them long term. Aylea Wilkins is an editor specializing in personal and home equity loans. She has previously worked for Bankrate editing content about auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information. Bankrate logo The Bankrate promise
At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict editorial integrity, this post may contain references to products from our partners. Here's an explanation for how we make money. Bankrate logo The Bankrate promise
Founded in 1976, Bankrate has a long track record of helping people make smart financial choices. We’ve maintained this reputation for over four decades by demystifying the financial decision-making process and giving people confidence in which actions to take next. Bankrate follows a strict , so you can trust that we’re putting your interests first. All of our content is authored by and edited by , who ensure everything we publish is objective, accurate and trustworthy. Our loans reporters and editors focus on the points consumers care about most — the different types of lending options, the best rates, the best lenders, how to pay off debt and more — so you can feel confident when investing your money. Bankrate logo Editorial integrity
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You have money questions. Bankrate has answers. Our experts have been helping you master your money for over four decades. We continually strive to provide consumers with the expert advice and tools needed to succeed throughout life’s financial journey. Bankrate follows a strict , so you can trust that our content is honest and accurate. Our award-winning editors and reporters create honest and accurate content to help you make the right financial decisions. The content created by our editorial staff is objective, factual, and not influenced by our advertisers. We’re transparent about how we are able to bring quality content, competitive rates, and useful tools to you by explaining how we make money. Bankrate.com is an independent, advertising-supported publisher and comparison service. We are compensated in exchange for placement of sponsored products and, services, or by you clicking on certain links posted on our site. Therefore, this compensation may impact how, where and in what order products appear within listing categories. Other factors, such as our own proprietary website rules and whether a product is offered in your area or at your self-selected credit score range can also impact how and where products appear on this site. While we strive to provide a wide range offers, Bankrate does not include information about every financial or credit product or service. To combat record-breaking inflation, the Federal Reserve raised interest rates by 0.75 of a percentage point at the November Federal Open Market Committee meeting. This is the sixth rate hike so far this year, and the fourth time in a row the Fed has raised rates by 75 basis points. The Federal funds rate now sits at 3.25 percent, and experts expect it to reach 4.4 percent by the end of 2022. These rate hikes have impacted the interest rates offered by personal loan lenders. Most personal loans have fixed rates, so current borrowers do not need to worry about their interest rates changing. Borrowers in the market for a personal loan should prepare for rising interest rates, but there are things you can do to mitigate those costs. “Rising interest rates aren’t good news for those in the market to borrow,” says Greg McBride, Bankrate’s chief financial analyst. “But borrowers with strong credit will continue to find very competitive terms even in the face of another large Fed rate hike. It is important to compare different lenders to get the best deal.” Will the Fed rate hike affect existing personal loans
Most personal loans are fixed-rate loans, meaning that the interest rate you pay does not change over the life of your loan. Borrowers who already have a fixed-rate personal loan will not see changes to their interest rate or monthly payments. When you receive a fixed-rate loan, you lock in an interest rate. No matter what the market conditions are, your interest rate should remain unchanged and the overall cost of your loan unaffected. However, some lenders do offer variable-rate personal loans. Borrowers with a variable-rate personal loan may see their interest rate increase with the federal rate. If you have a variable-rate loan, it may be worth considering transferring your current balance to a fixed-rate debt consolidation loan. How will the Fed rate hike affect new personal loan borrowers
The federal interest rate set by the Fed does influence the prime interest rates lenders offer for new borrowers. The average personal loan interest rate was 10.28 percent at the beginning of 2022 and has risen steadily throughout the year. As the Fed has introduced several rate hikes, the average personal loan rate has also increased. The average personal loan interest rate as of November 1, 2022, is currently 11.28 percent, a 0.87 percent increase from the end of July. While the Fed has signaled that it will likely at some point in 2023, more rate hikes are likely to occur into next year. As the Fed continues to raise rates, personal loan interest rates are likely to continue rising. While rising interest rates are certainly concerning for borrowers in the market for a personal loan, lenders are still offering competitive rates, especially for borrowers with good credit. If you are in the market for a loan, it may be best to act now to avoid higher rates later on. How can you get an affordable loan despite rising interest rates
Personal loan interest rates are getting more expensive overall, but the federal rate is not the only thing affecting your loan’s cost. You can do several things to help get the best deal possible, including improving your credit score, shopping around for the best lender and applying with a co-borrower. Here are some of the steps you can take to get the best deal possible on your personal loan: Reduce your loan amount and repayment term Apply with a co-borrower Personal loans for credit card debt consolidation
Unlike most personal loans, credit cards are variable rate products, meaning that market conditions directly impact the interest rate you pay. If you have credit card debt and are worried about how rising interest rates will impact your monthly payments, it could be worth considering a fixed-rate . Personal loans tend to have lower interest rates than credit cards overall. If you are struggling with credit card debt and your interest rate is becoming unmanageable, a debt consolidation loan could offer a lower rate, lower monthly payments and a faster way out of debt. Make sure to prequalify with lenders and figure out what rate you qualify for before deciding to consolidate credit card debt. You should only pursue a debt consolidation loan if you qualify for a lower rate than you are currently paying. Bottom line
Because personal loans are fixed-interest products, current borrowers will not be affected by the Fed’s rate hikes. While interest rates on new loans are likely to keep rising, new borrowers can still qualify for competitive rates by improving their credit and shopping for the best deals. If you are interested in consolidating debt from a variable interest product, debt consolidation loans could offer a cost-effective solution. Frequently asked questions
What is the Fed
The Federal Reserve is the central banking system in the United States. Its primary function is to promote and support a strong U.S. economy by regulating financial markets, managing the money supply and setting interest rates.
When is the next Fed meeting
The next Federal Reserve Open Market Committee meeting is scheduled for December 14th, 2022.
How much have interest rates changed since the beginning of 2022
The Federal funds rate was at 0.25% at the beginning of 2022 and has since risen 3%, greatly impacting the interest rates offered in the lending market.The average personal loan interest rate was 10.28% at the beginning of 2022 and has risen a whole percent to 11.28%. SHARE: Raija Haughn is an associate writer for Bankrate.com specializing in personal and home equity loans. She is passionate about helping people make financial decisions that will benefit them long term. Aylea Wilkins is an editor specializing in personal and home equity loans. She has previously worked for Bankrate editing content about auto, home and life insurance. She has been editing professionally for nearly a decade in a variety of fields with a primary focus on helping people make financial and purchasing decisions with confidence by providing clear and unbiased information. Related Articles