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Book by Prentzas, G. S.
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Mathematics of Interest Rates and Finance by Larry D. Lemon and Gary C. Guthrie
Interest Rates, the Markets, and the New Financial World
Question by TNT DynaMiKe: What are federal reserve interest rates and how do they affect the economy?
I know what the federal reserve is and I know what interest rates are. Now what is a federal reserve interest rate and what the heck does it mean to me?
Answer by Alby
Federal Reserve Funds Rate: 1.00%
Federal Reserve Discount Rate: 1.25%
The Funds rate is the rate at which the Federal Reserve manipulates the inter-bank lending to achieve a bank to bank lending rate of 1.00%. The Discount Rate is the rate at which banks pay if they need to borrow money directly from the Federal Reserve.
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Question by Oz Z: How does falling interest rates of one currency affect other currencies?
For instance, if EURO interest rates are reduced, how does it affect EUR/USD exchange rates. Common sense dictates that the EUR/USD would decrease in value as people flock to currencies with higher returns. But this is not only always the case. It may be not the actual reduction in rates, but the commentary (optimism/pessimism for the future) that goes along with it. Comments?
Answer by tdoan89
You make a good point. However, the interest rate cut affects the exchange rate well before the cut actually takes place. Investors estimate how many points the interest rate will be cut and the exchange rate adjusts accordingly. On the day of the cut, if the interest rate is cut more than expected, then the value will fall and vice versa. Then immediately after the adjustment, the exchange rate once again forecasts the future.
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Question by ronnin72: How many credit cards is too much to affect your credit score?
I am going to ask another question regarding which CC should I add to my credit card profile to add to my rewards. I have excellent credit, pay my balance in full each month, and I use my CC to pay for everything I can to rack up points/miles etc.
I am at a point where I want to increase my points and miles so there are some options. The question is, what is too much. I basically share a VISA with my wife, and have an older VISA that i keep. I realize that you should keep older credit cards for history. I want to add at least one AM/EX either the Starwood points, or the Delta Miles. I also might switch our Cap1 card to the signature to get 2 points for every $ 1 spent, instead of 1.25 for $ 1. That is a new card, not a switch. And recently, I have received letters for UNITED miles (20,000 bonus) and AA Miles (21,000 Bonus). I would love to use those just to add to my miles on those flights. Could I add 3-4 cards without hurting my excellent credit? I will not rack up debt.
Answer by ray z
some of it has to do with how many cards you have, but not too much emphasis is on the quantity. It is mostly on the amount of available credit you have access to and how much of that credit is being used currently. If you are over 40% on your total credit, it lowers your score quite a bit.
What do you think? Answer below!
Question by msc44: How do I switch credit cards and not affect my credit score?
I want to get a frequent flyer credit card but I already have 3 credit cards with generous limits. I don’t need these credit cards and I would like to cancel them and have this “possible credit” to go towards the new card. I heard once that canceling a credit card has a negitive effect on your credit score. Is this true? If so, how do I switch credit cards and avoid affecting my credit score in a bad way?
Answer by Serge M
Yes, it is true. Having active credit cards on your record is no problem. It shows that card issuers are willing to extend credit. If these cards have no balance on them, you should have no trouble getting a new card. Apply and start using it.
If there are balances on your other cards, it is a different issue. You should pay them off, or transfer them to the card with the lowest interest rate and pay that off as quickly as possible. Then make sure you never have a balance on a card that exceeds about 30 percent of the credit limit.
Paying the monthly charges in full each month is the best policy. It also means not paying any interest.
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