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How the Fed Rate Cuts Affect You

Fed Cut Rates Yesterday: Now What?

Yesterday's news isn't the last we'll hear from the Fed regarding interest rates. Their two day regularly scheduled meeting is just next week, and another rate reduction may be announced by the time the meeting is adjourned. Rate cuts are being used to calm the markets and instill consumer confidence to keep us investing and spending. The three-quarter percentage cut yesterday and any future cuts could affect you in several ways. To see what they are please

  • Borrowing costs are lower for banks and so it's the Fed's hope they will pass these rates along to consumers and businesses.
  • Mortgage rates should be cheaper for those with good credit and money for a down payment.
  • If you're shopping for a car, you may be able to find a cheaper rate for a car loan.
  • If your credit card has a fixed rate nothing will change, but if your card has a variable rate you should see changes in about a month. Call your credit card company and ask them to lower your rate.
  • Interest on your savings accounts, money market accounts, and certificates of deposit will drop. But that doesn't mean you should give up on saving!
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    sophia_HL sophia_HL 8 years
    You forgot to mention THE DOWN SIDE of the rate cut... fueling more inflation! This is really a situation of being damed if you do and damed if you don't. We will have to face the consequences of our irresponsible spending at some point.
    aljefferson-tbag aljefferson-tbag 8 years
    is this emergency rate cut (75basis points cut) just a bandaid or a real fix to the credit crunch (crisis)? i think you are correct Savvy as far as seeing another rate cut next week too when the feds meet. crazy times!
    nola45 nola45 8 years
    People need to understand that this is a "credit crisis" not just a subprime mortgage crisis -- our employers can't borrow money easily if the banks are losing money on bad loans, and maybe they will need to downsize. Some, like startups who are highly leveraged, might just go out of business as money for them dries up.FYI -- my husband just called a major lender in CA to refinance our mortgage at a lower rate (as triggered by the Fed Reduction) and the line was so busy, that they recommended calling later. Everyone is refinancing, it seems!!
    nola45 nola45 8 years
    People need to understand that this is a "credit crisis" not just a subprime mortgage crisis -- our employers can't borrow money easily if the banks are losing money on bad loans, and maybe they will need to downsize. Some, like startups who are highly leveraged, might just go out of business as money for them dries up. FYI -- my husband just called a major lender in CA to refinance our mortgage at a lower rate (as triggered by the Fed Reduction) and the line was so busy, that they recommended calling later. Everyone is refinancing, it seems!!
    SkinnyMarie SkinnyMarie 8 years
    Our problem is stemming from a few years ago with those amazing interest rates. The problem though is that its affecting more then just the banks who lent too much money, its affecting people. Our economy depends too much on the likes of people for spending, not businesses. We also aren't buying things where the profit from it comes back to our own economy. We are spending our money at places that aren't putting the money back into american workers. I have no problem with buying some items made from other countries, but we have an addiction to places like walmart who drive companies to make everything in china to make it cheaper.
    smp7328 smp7328 8 years
    People seriously need to pay attention to what is happening in the financial sector in this country. If our economy is not adequately stimulated to offset the radically mounting inflation, we are going to see a major breakdown in the economy, resulting in loss of jobs and a great plummett in the value of the dollar. This giant cut in the interest rate by the Fed is not doing anything, especially when you look at the steep drop that the markets took right after the cut.I just hope that we can turn around the economy before we have a serious recession.
    smp7328 smp7328 8 years
    People seriously need to pay attention to what is happening in the financial sector in this country. If our economy is not adequately stimulated to offset the radically mounting inflation, we are going to see a major breakdown in the economy, resulting in loss of jobs and a great plummett in the value of the dollar. This giant cut in the interest rate by the Fed is not doing anything, especially when you look at the steep drop that the markets took right after the cut. I just hope that we can turn around the economy before we have a serious recession.
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