And the Answer is . . . Rumpelstiltskin !!!

The question is - when and how much should you raise your consumer loan interest rates? Rumpelstiltskin obviously isn't the answer, but sometimes it seems like it's about as good a guess as any. The miller's daughter (trivia question - what was her name?) made an informed choice when she guessed Rump's name and won a color T.V. or a trip or a car. I don't recall all the details.

Anyway, setting interest rates sometimes feels like a guessing game. Due to the likelihood of rising interest rates, you have some decisions to make regarding loan rate increases. Some choices: wait until external rates begin to rise and lag behind the market (to try to pick up market share with lower rates), raise rates in concert with the Fed rate increases, or start raising rates now.

Setting interest rates depends upon many factors including your credit union's philosophy, your ALM position, etc. Just remember that because you are "stuck with" loan terms currently on the books, your overall loan portfolio yield won't change all that quickly.

Here's my two cents: for several reasons, the market can currently bear fairly high loan rates compared to deposit rates. Shop the competition and squeeze out as high a rate as you can now and stay on top of it, raising rates as aggressively as possible. This way, you will be well-positioned once rates move up.