Fed Cuts Interest Rate for First Time in 11 Years. What Does It Mean to You?
Written By: Jaymi Naciri
Monday, August 12, 2019
The Federal Reserve just cut interest rates for the first time in 11 years. So what does that mean for consumers, especially those who are looking to buy a home? Wersquo;re breaking it down.nbsp;
Itrsquo;s important to remember that mortgage rates arenrsquo;t set by The Fed. And, as Bankrate puts it. ldquo;The Fedrsquo;s influence over mortgage rates is complicated.rdquo;nbsp;
Mortgage rates are already below 4 as we write this, and they ldquo;arenrsquo;t likely going to respond quickly to a Fed rate adjustment,rdquo; they said. ldquo;Any further movement in mortgage rates will be tied to the outlook ahead. Thatrsquo;s because mortgage rates are more more closely follow long-term yield, like the ldquo;10-year Treasury yield, which serves as a benchmark to the 30-year fixed mortgage rate.rdquo;
If you have a lot of credit card debt, you may see a little >
When you look at the potential savings in one big lump spread among households across the country, the number looks substantialmdash;ldquo;Considering that thenbsp;average household currently owes 8,390, credit card users would save roughly 1.5 billion in interest as a result of a quarter-point rate cut,rdquo; said CNBC. ldquo;However, that may result in little benefit per cardholder with APRrsquo;s still near record highs. For example, a customer with a credit card balance of 1,400 at a 14.4 rate would only see their financing charge decrease by about 30 cents each month.rdquo;
You may see the yield on your savings account drop. ldquo;Prior to the Fed cutting rates on Wednesday, the average interest rate among online banks was 1.69, as opposed to an average of 0.28 offered by brick-and-mortar banks,rdquo; said CNBC. Thatrsquo;s according to annbsp;analysis of savings accounts conducted by DepositAccounts.com in June.rdquo;
Interest on online-only savings accounts could drop as much as 0.11, according to WalletHub CEO Odysseas Papadimitriou. But these still may be your best bet for a high yield. ldquo;Savers looking for a higher return might consider online savings accounts, which,nbsp;in many cases, are still paying yields of 2 to 2.5 percent,rdquo; said the New York Times.nbsp;
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