Yesterday the Federal Reserve announced its seventh interest rate cut since September, lowering the federal funds rate by a quarter-point to 2 percent. Interest rates are now at their lowest since 2004 and reflect the Fed's ongoing concern about a weakening economy. The prime lending rate that affects consumers and businesses dropped correspondingly, which could have a positive effect on some credit cards and loans. Also, homeowners with adjustable-rate mortgages should have benefited from the seven rate cuts as rates would have been reduced as the Fed has made their moves.
The rate reductions are bad news for savers, because the interest rates available on savings accounts are lower than they used to be. The average rates barely keep up with the country's 4 percent inflation, which essentially means you're losing money by saving. But don't take that too literally and abandon your savings efforts — shop around for the best interest rates, and keep in mind that earning any interest is better than earning no interest.