Another week and yet another piece of national financial news that has some impact on our everyday lives. This past week the Federal Reserve made a decision to cut interest rates by a quarter point (0.25%). This Federal rate decline will have an impact on mortgage rates, credit card rates, auto loans and the interest your bank will pay you on savings and interest bearing checking accounts. Here is how each of these sectors could and probably will be affected:
The prime rate according to Investopedia is the interest rate that commercial banks charge their most creditworthy customers. The banks usually charge three or four percentage points above the prime rate.
Due to the lowered Federal rate, credit card APR should begin to decrease. As a matter of fact, within the next month or so you may want to give the bank that issued your credit card a call to request a lower APR. A good idea would be to find a card that would allow you to transfer your high rate credit balances interest- free for an extended period of time (usually eighteen months).
If you are in the market to buy a home, now is a good time as the rates are lower. If you are seeking to refinance your home for a better rate, lower payment, eliminate a mortgage insurance payment or to take cash, out this is the time to refinance. Depending on your credit score; income and ratio, this is prime time to go after that mortgage because of the Federal rate cut.
In like manner, student loans interest and auto loan interest should also see a reduction. Inquire with the company servicing your student loan about the potential lower interest rate if you have private loans.