Go to the Federal Reserve Web site, http://www.federalreserve.gov . Click on the

Question

Go to the Federal Reserve Web site, http://www.federalreserve.gov . Click on the Consumer Information tab, and research consumer credit in the various hyperlinks. Find average interest rates charged by commercial banks on new automobile loans, personal loans, and credit card plans for the current rates. (2016)

a. Compare the average level of interest rates among the three types of loans.

b. Click on the Economic Research & Data tab, click on the “Statistics: Releases and Historical Data” hyperlink and then “Consumer Credit,” and compare trends in the cost of consumer credit provided by commercial banks over the past three years

Explanation / Answer

a)

Average interest rate on automobile loans: 4.42%

Average interest rate on personal loans: 10%

Average interest rate on credit card plans: 12.15%

b)

The cosat of providing consumer credit by commercial banks has shown an increasing trend over the past 3 years, as the total outstanding credit has increased for these years, showing an increased burden and losses to the banks. They increased from $841.5 billion in 2011 to $937.9 billion in 2015

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