[bluedevil2k]

The Fed rate is the interest rates that the Fed pays banks for their deposits in the Fed. By lowering it, they’re incentivizing the banks to loan the money and provide liquidity into the market. Since banks need to make a profit on everything, they’ll loan the money out at a higher rate for things like mortgage, car loans, and credit cards. Depending on the credit worthiness and the collateral, the rates will differ (mortgage lower than an unsecured credit card). Ultimately, the Fed lowering the rates will lower all interest rates, but you’ll never get to 0% as a consumer.

[thebeardisred]

You'll never get zero on _some_ products. Retailers utilize low interest rates to provide "direct" financing to incentivize purchases at their stores. This is often provided as a "promotional"[1][2] rate with the hope that it will spur purchasing in the short term and then make money on the financing in a longer timeline. Often this is done at stores which sell "durable goods" (e.g. appliances or automobiles). The takeaway? You can absolutely get 0% as a consumer, as always though there is fine print.

[1]: https://www.mymoneyblog.com/be_careful_of_0.html [2]: https://www.edmunds.com/car-loan/what-you-need-to-know-about...

[wideasleep1]

Back in '95, Wachovia ran a short credit card promo, called 'Prime For Life'. The account changed hands a few times, and is currently with Chase, but it remains nailed to prime, albeit an $88 annual fee. No, they have never raised my $7K limit, the effers.

https://www.questia.com/magazine/1G1-16441751/wachovia-claim...

[LeoTinnitus]

I glossed over "credit card" at first and now I'm 100% jealous. That is single highhandedly the greatest credit card ever haha! I'd pay $88 for that. You garner barely any interest as it stands!

[kube-system]

That's kind of outside of the topic of finance though. Subsidized car loans are just as relevant to the financial markets as free samples at Costco are relevant to agriculture prices.

[xxpor]

>but you’ll never get to 0% as a consumer.

Unless we see negative fed rates. Not that I think going so negative we see consumer level 0% mortgages is likely.

[jaggederest]

Ironically, much of the tax advantage of owning vs renting is embodied in the mortgage interest tax deduction. If there were no interest, obviously it would be a good deal, but would not have the additional benefit of tax avoidance that it does at present.

[dlp211]

Much of the tax avoidance from primary residence property has been removed from the tax code already due to the TCJA. Not all of it, but most of it. It also makes no sense to have a mortgage for the tax break. Rentals have depreciation and the interest remains deductible as an expense on them there, so that isn't really an issue.

[aksss]

Regarding tax avoidance from primary residence, what specifically? I can still deduct mortgage interest. Are you talking about not itemizing some home ownership expenses (like what?) because standard deduction increase? Just wondering what I’m missing..

[mobilefriendly]

You can't deduct it with the new larger standard personal deduction, only if you itemize. The Trump tax bill was a reform made the mortgage deduction moot for about 20 million taxpayers.

[tjomk]

Take a look at Europe with negative rates. Every bank has a statement that if the rate goes below 0 your effective rate will still be above that.

[steveeq1]

if the consumer rate is 0%, what is the stop the consumer from borrowing an unlimited amount of money?

[brianpgordon]

One note... what you're describing is the IOER rate, not the fed funds rate. But other than that you're spot on.

[triangleman]

The federal funds rate is the rate banks pay when they borrow from the Fed.