There’s an important percentage rate that influences everything from inflation to what you pay to borrow money. The federal funds rate is raised and lowered by the Federal Reserve (aka America’s central bank). Increasing rates means the Fed thinks the economy’s doing well enough to handle higher borrowing costs. Fed’s lower rates to encourage people to borrow, spend, and invest in hopes to boost the economy. In light of current events, here’s what lowering the federal funds rate can mean for your wallet:
TIP 1: If you have credit card debt lower interest rates = awesome! The average rate on a new card is still over 17%. That’s high! Lower rates make it less expensive and easier to pay off your balance quickly. Right now is a great time to put extra towards your credit card debt! For my FAVORITE TOOL to combat debt FAST click here.
TIP 2: If you’re a saver low interest rates are kind of a bummer. It means you’ll earn less on the money you keep in your savings account to cover unexpected emergencies, future vacations, holiday spending, etc. EXPERT TIP: If you’re in the market to set up an emergency savings account, check out rates at online banks. They usually pay a little better than old-school options and…promotes social distancing!!
TIP 3: If you're house hunting...spring for the beach-front property! Just kidding. Stick to your budget. Always. But low interest rates mean you'll get more house for your money. More bang for your buck! Already own a home, check into refinancing while rates are low! Generally speaking, an interest rate that is more than 1% lower than your current rate is worth the cost to refinance. The same goes for car loans. Want more great tips on what to know before, during, and after buying a home? Check out the USU Extension Online Homebuyer Course.
TIP 4: If you’re investing...buy baby, buy! Buy low, sell high is a pro tip when it comes to investment strategy. Consider putting a little extra in your investment/retirement accounts this month. Haven't started investing? Now is an excellent time to start. Check out my pro tips on how to choose a financial professional here.
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