While the Fed raises prices, consumers still do not feel

According to Bankrate.com, variable rates on credit card debt averaged 17.31% last week, compared to 17% on June 6th. The average rates on new car loans at age 5 were 4.80% last week, compared with 4.71% on June 6th.

The Fed's benchmark rate affects many other sectors of the economy, but consumer borrowing costs are finally set in the markets based on a variety of factors.

In some cases, consumption rates have been limited by competition between lenders competing for market share in a booming economy. In addition, new technologies make it easier for consumers to apply for financing and compare rates quickly.

For example, the average rate of a new 5-year car loan is still lower than in 2011, when the Fed's Fed funds reference rate was close to zero, according to Bankrate.com.

Some credit cards, meanwhile, continue to try to attract customers with a variety of benefits, such as 0% interest for a period after the transfer of balances from their competitors.

Long-term rates, such as the fixed rate on a 30-year mortgage, are generally less affected by the Fed's decisions than by the 10-year Treasury bond yield, which largely reflects the economic outlook.

Mortgage rates jumped the most this year in January and February, when tax cuts and increases in public spending led many economists to raise their expectations for growth and inflation.

Fed officials said they plan to raise their benchmark rate by a quarter of a percentage point this week, from 2% to 2.25%, the eighth increase since the end of 2015. .

For some Americans, who have been experiencing the strongest job market for nearly two decades, the Fed's rate hikes have been too gradual to get noticed.

"I can not tell you what the percentage rate is on my credit card," said Dean Gyorgy, 52, who owns an Internet marketing agency with two employees in Wayne, Maine. He said his debt had increased because he had invested in his business, but he added that the revenues were also rising and he was confident about the future. "We simply pay what we can every month and do not look at it too closely."

The modest overall rate hike masks a growing divergence between the best and worst rates available for many products. For consumers, this makes purchases even more important.

"As rates go up, [companies] react differently based on their strategic plans, cost structures, and their perception of market competitiveness, "said Tendayi Kapfidze, chief economist at LendingTree.

The gap between the highest and lowest mortgage rates available in the market has widened by about one-third this year, to 0.62 percentage points, according to LendingTree. For a loan of $ 300,000, this represents a lifetime difference of $ 28,890.

An even bigger gap appeared in the rates that savers earn on their bank deposits.

Many large banks have barely increased payments to depositors since the Fed began raising rates in 2015. The standard savings accounts at

Bank of America
,

For example, you can earn a return of 0.03% per annum and a monthly fee of $ 8 for deposits under $ 500.

But more online banks are offering better returns when they are looking to develop lending activities. According to LendingTree, the savings accounts of these banks pay on average 1.35% per year, almost six times the average of the physical banks.

"For savvy savers who are willing to shop, the rate hike is good because you make more money and the arms race continues," said Greg McBride, Chief Financial Analyst at Bankrate.com.

Write to Paul Kiernan at [email protected]