Business
Three Financial Decisions to Make Following the Fed’s Interest Rate Cut
The Federal Reserve was forced to increase interest rates when inflation began to soar in an attempt to bring it down. However, since inflation isn’t nearly as severe as it once was, the Fed will likely begin lowering interest rates later in 2024.
We are unable to pinpoint the exact date of those rate reductions at this time. However, here are three financial decisions you might want to make once they do materialize.
- Combine credit card debt and apply for a personal loan
Juggling several credit card balances could be more than just a stressful way for you to remember to make your payments. You may be earning a ton of interest.
If the Federal Reserve lowers interest rates, you might discover that borrowing costs decrease overall. By then, it might be a good idea to transfer expensive credit card debt into a personal loan.
In this manner, you’ll only need to worry about one monthly payment. Not to mention, compared to credit card bills with variable interest rates, you’ll have a fixed monthly payment that may be much easier to fit into your budget.
- Sign a necessary loan but you have been delaying
Perhaps the summertime malfunction of your home air conditioning system means you need to replace it before the next warm weather season. When the Fed lowers rates, you should try to take on any significant home repairs that you’ve been putting off because you didn’t want to finance them during the rising interest rate period.
Likewise, it could seem like driving a car is getting riskier every day. If this is the case, you might wish to purchase a new one once the Fed lowers interest rates and financing a car purchase isn’t quite as expensive. You could do this by taking out an auto loan.
- Observe the maturation date of the CDs you currently own
In 2023, a lot of people locked in CDs as rates were rising. The price of CDs may begin to decline once the Fed cuts interest rates. And if they decline significantly, you might conclude that it would be wiser to maintain your funds in a regular savings account as opposed to paying for new CDs when they expire.
Because of this, once the Fed lowers interest rates, make a note of the dates on your calendar for each of your CDs to mature. Your CD will frequently automatically roll over into a new one with the same term if you don’t specifically instruct your bank not to renew it when it matures. If interest rates drop from where they are now, you’ll want the chance to evaluate your options.
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