NASHVILLE, Tenn. (WTVF) — If you have credit cards, loans, or a savings account, the recent cut by the Federal Reserve on short-term interest rates will likely affect you and your money.
In September, the Fed announced a quarter-point interest rate cut, but what does that mean for you? Can you save a little more money?
First up – credit cards. If you carry a balance, expect a slightly lower interest rate. Ted Rossman with Bankrate says you might not notice it on your monthly statement.
“If you have the average debt load, which is more than six thousand dollars, if you're making minimum payments, that monthly minimum payment changes by a dollar a month," said Ted Rossman with Bankrate. "Credit card rates are so high that honestly, even if that rate fell two or three points, which could take years, it would still be high-cost debt.”
Consumer Reports says you may save money on interest by working with a credit union, bank, or a finance counselor to create a plan and pay off debt with a personal loan.
If a cut-rate balance transfer offer tempts you, keep a close eye on fees and what your interest rate jumps to when the introductory period ends.
Federal student loans, car loans, personal loans, and most mortgages have fixed interest rates–you’re locked in, and those won’t change unless you refinance.
However, if you plan to take out a new loan, the rate cut could help new borrowers. If you’re shopping for a car, expect a marginally lower rate.
“It's not going to be a huge difference. Like if the average new car loan goes from 7.2 to 7%, I mean, you're only saving a few bucks a month.”
After a fed cut, the interest rate on your savings account will usually dip too, but that’s not always the case because of stiff competition amongst banks.
“Right now, we are seeing some competition for deposits, which is a good thing for consumers.”
The top savings rates, often from online banks, are about 4.3 percent. Bottom line for borrowers and savers: Do a little homework and shop around. Even a small rate change can make a big difference over time.
Do you have more information about this story? You can email me at jennifer.kraus@newschannel5.com.
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