What lower interest rates mean for you

The Federal Reserve announced a much-anticipated 0.5% interest rate decrease on September 18, 2024 – the first decrease since March 2020. Lower interest rates certainly sound positive, but what does the drop actually mean for consumers and borrowers?

The Fed’s rates serve as a basis for lenders’ interest rates, which determine how much you will ultimately pay in interest on credit card and loan debts. Whether you’re considering taking out a loan or are a current borrower, these cuts could have implications for your wallet. We’ll outline some of the ways the rate drop could affect you, and what actions you might want to consider as a result.

Existing variable rate loans

If you currently hold a loan with a variable interest rate such as an auto loan, mortgage, line of credit, Student loan, or credit card, you could see that rate decreasing. While 0.5% may not be enough to make a significant difference in your monthly payments, the Fed could lower rates again in the coming months.

 

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