In response to the Federal Reserve raising interest rates by a quarter percentage point for the first time in nearly a decade, prominent U.S. banks have stated that they would raise rates on some loans, according to NASDAQ.
American banks who announced an increase in their prime rate include financial heavyweights such as J.P. Morgan Chase & Co., Wells Fargo & Co., Bank of America Corp., Citigroup Inc., as well as other large financial institutions.
Following the trend in the Federal Reserve, the banks' prime lending rate is set to increase from 3.25 percent to 3.5 percent. Most of the banks announced that the changes would take effect on Thursday. Bank of America, however, announced that it would increase its rate the day after, on Friday, reports The Wall Street Journal.
Despite the changes, the banks announced that the interest rates on savings accounts or certificates of deposit will not be raised. Thus, depositors hoping for a bump in their savings rates would need to wait for some time.
Greg McBride, a senior vice president at Bankrate.com in West Palm Beach, Fla., believes that for the everyday saver, the changes of the interest rate hike would not be evident in the near future, according to USA Today.
"Savers will see little to no measurable improvement in the near term. It will likely take at least a couple of rate hikes before that materializes," he said.
The prime rate is one of the most widely used benchmarks in setting home equity lines of credit and credit card rates. It is based on the federal funds rate, which is determined by the nation's Federal Reserve.
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