How the federal reserve lowering interest rates impact your wallet

Consumer

In this week’s Show Me the Money report, we’re talking about why the federal reserve is lowering interest rates for the second time in two months and how that directly impacts your wallet.

It will impact your wallet if you’re looking to borrow money or increase your savings.

The federal reserve deciding to lower interest rates is one sign of a slowing economy. Although, federal interest rates are well above where they were just a few years ago.

Here is how the cut will impact your bottom line, credit card companies typically mirror the federal reserve so chances are the interest rate you pay could fall, but not as soon as you think.

Credit card agreements usually allow companies to use the highest rate from the previous 60 days. You might see similar decreases on your car loan rates.

The impact on your monthly mortgage payment depends on your type of plan. For example, a fixed-rate mortgage is just as it sounds, fixed, so no change there. Payments on an adjustable-rate mortgage will likely drop.

Don’t expect to see your savings account fatten, you’ll be earning less interest on the money you’ve got stashed.

As for what the future holds, the fed chairman says if the economy weakens they are prepared to be even more aggressive which could lead to slashing rates again.

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