What The Impending Fed Rate Cut Means To Your Wallet

Signs point to a 1/4 point interest rate cut today. What this means for you:

– Savings yields on things like money market accounts, online savings accounts, and certificates of deposit will drop.
– APR on credit cards with variable interest tied to the prime rate will drop.
+ Stocks have rallied and will continue to until everyone remembers all those defaulting loans.
– Banks will cut their loan rates, creating an opportunity to negotiate your higher interest loans into lower ones.

(Photo: Getty)


Edit Your Comment

  1. timmus says:

    Also gold prices will certainly rise, due to growing concern over hyperinflation due to the unchecked expansion of the money supply.

  2. Tux the Penguin says:

    @timmus: I’m sorry, but investing in gold is historically just been a break-even measure, long-term. If you’re getting into gold, it better be short term or you’ll end up getting a meaningless return. Couple that with the fact that people are advertising buying gold, which makes me wonder… if the market is naturally so good, why are these people trying to find people to buy it from them?

  3. darkened says:

    Can we remove this idiot from existence for treason? This is the most absurd thing ever. First he makes the american dollar worth less than the canadian dollar, now he’s going to try to equal the peso?

  4. darkened says:

    @TUX because they’re trying to buy it from people below value.

  5. darkened says:

    As much as I hated Greenspan, we need him back apparently he had alteast half a more clue than this idiot.

  6. HRHKingFriday says:

    @darkened: Greenspan = best liar evaaaaar!

  7. Ariah says:

    We’re a long, LONG way from hyperinflation, sir. We’re experiencing inflation at a rate of less than 3% per year.

  8. HRHKingFriday says:

    @Ariah: On items other than gas, food, you know, things that everyone can survive without.

  9. Tracy Ham and Eggs says:

    Since most people have far more debt then they have savings this will create a positive net cash flow. I personally would prefer a little pain over a longer period then this reduction and the inevitable hit. On the other hand, my guess is in a year when we see a rebounding of the housing market there will be a decent sized rate jump, which will keep it housing prices down.

  10. Anitra says:

    @Ariah: You actually believe the official inflation numbers? They cut out all the items that are actually inflating – food, gas/oil, health care, housing/rent… It’s not hyperinflation (yet), but it’s certainly a lot more than 3%.

    Luxury items aren’t increasing in price; some are even decreasing (e.g. electronics). But necessities are increasing very quickly; and pay is not.

  11. beavis88 says:

    @AnitraSmith: Exactly. I always love the “inflation minus oil and food” figures. Too bad I can’t calculate my budget without including oil and food…

  12. mookiemookie says:

    Well the Fed can’t make it rain, and they can’t discover and refine oil so they tend to look at things that monetary policy can actually affect.

  13. scatyb says:

    @Ariah: Well, that number is skewed. It’s far closer to 6% once you add back all the factors that presidents(including Republicans) have removed over the years.

  14. scatyb says:

    @AnitraSmith: You’re right. Pay is not increasing hardly at all. This past month, my company(which is very large) gave out raises to the tune 2.5% on average. Now keep in mind the the only way anyone here gets any more money is by either a promotion, or a raise which is performance-based. Needless to say, alot of people were suddenly getting written up for being like 1 minute late from lunch.

  15. mac-phisto says:

    APR on credit cards with variable interest tied to the prime rate will drop.

    riiiiiight. more likely i’ll receive yet another “important changes to your account agreement” update stating that my once-fxed-but-now-variable rate is changing from prime + 9.32988 to prime + 9.98556.

  16. ARP says:

    While it may be good short term, it will be bad long term. Bush has already made it clear that he’ll do just about anything to prevent recession on his watch. That means cutting rates, continuing to remove things which factor into inflation, borrowing like crazy, pouring cash into the market, sponsoring bills which really only help banks. Of course, what happens afterwords is not his problem. I get the feeling that the bottom will drop out soon after he leaves.

  17. BearTack says:

    Not all together a good thing. With a lowered interest rate the dollar falls. and oil prices prices go up along with other energy and commodities. More nations are dumping the dollar as their standard of trade, and the cost of imported goods will continue to rise. This may help the trade balance in the long run, but it will cause a lot of pain in the process. It will also result in the sale of even more American assets to foreign corporations.

  18. HRHKingFriday says:

    @mac-phisto: do prime rate cards even exist anymore?

  19. HRHKingFriday says:

    @BearTack: Sometimes I wonder though, whether we’d be better off being run by foreign corps. I’d trade walmarts for IKEAs any day. Too bad its just the Saudis and Pan-asians buying us out.

  20. catcherintheeye says:

    @mac-phisto: Or “we’ve now changed from prime to LIBOR!”

  21. BigNutty says:

    Bush is already planning for his mark in history and of course will not allow anything to disturb it, especially a recession. I read a recent survey that stated that people are more concerned with the cost of health care than their mortgage.

    Speaking of gold, have you seen those commercials that tell you to “send in your gold in our envelope and we will pay you cash?”

    They don’t even mention how much they will pay.

  22. mac-phisto says:

    @catcherintheeye: lol. you know, that’s exactly what i thought after i hit ‘submit’!

  23. AD8BC says:

    Honestly… With all of this bush bashing…

    Do you honestly think that Algore or “Waffle House” Kerry would have done any better?

    They all suck.

  24. iheartconsumerist says:

    All Gore and John Kerry may not have been the best candidates but it seems pretty safe to assume if they had been elected we wouldn’t have randomly decided to invade and occupy a country in the middle east. Since the war in iraq so far has cost around 475,000,000,000 its hard to believe that having that money put into OUR economy instead of paying millitary contractors to kill civilians would have helped ease some of the pain our economy is experiencing.

  25. wezelboy says:

    @ad8bc: Actually, yes. Either of them would have been better. Bush is either incredibly incompetent, genuinely malfescant, or possibly both.

  26. gingerCE says:

    Darn. I don’t want my savings account to drop. In just a short time it’s gone from 5% to 4.75%–not possibly 4.5%. Grrr.

    I saw on a comedy show (jon stewart?) that interview with Alan Greenspan where the host asked Greenspan why the feds disliked hardworking people who put their money in a bank and save.

  27. Tracy Ham and Eggs says:

    @gingerCE: actually the Feds love people who work and save, but they are too busy protecting the other 8-% who live on margin and debt.

    @iheartconsumerist: Im sick of this “Paying people to kill civilians” shit that is always getting spewed. It has no place here, and is a stupid and mean spirited comment, much like every political comment made about Bush or the military.

  28. zarex42 says:

    As has been said, be careful with cash, as inflation is hitting hard this year. Hedges include buying gold, or putting your cash in Euros. This is pretty easy with everbank, and you can get the same protection as any savings account/CD. The rate is obviously lower, but as inflation hits I’ll make much more than I would in a regular US CD.

    Stock market should get a little boost too.

  29. failurate says:

    @iheartconsumerist: Who do you think that money is being paid too? It doesn’t just disappear once spent. That money is being dumped into the economy.

  30. HRHKingFriday says:

    @Tracy Ham and Eggs: OK then what would you call it? Liberation (from life)? Those of us on the “left” side have taken quite a beating from mean-spirited comments from Bush, so stop being such a baby.

    Besides, its not even a political comment. THATS HOW MUCH WE’VE SPENT! I’m sure you’ve criticized someone for making bad financial decisions, this is consumerist after all. What would you say if your neighbor liquidated his entire property, stopped paying his neighborhood dues, and bought a bunch of guns? Cause that’s pretty much what Bush is doing.

  31. mac-phisto says:

    @Tracy Ham and Eggs: actually, i believe he said “paying military contractors” which is entirely different from the military.

    regardless, what gives your political leanings any more right to be here?

    [It] is a stupid and mean spirited comment, much like every political comment made about Bush…

  32. Tracy Ham and Eggs says:

    @mac-phisto: Actually I made no political comment. I just hate the tone that any conversation takes when it comes to politics. Its the nastiness and condensention that comes out that I object to.

  33. disavow says:

    @zarex42: No way, EverBank lets you buy foreign currencies? Didn’t know that, thanks!

  34. wezelboy says:

    @failurate: And what do we have to show for all of that money that has been “dumped into the economy”? Not much. Nothing that is worth even a single soldier’s life, let alone a few thousand.

    What if we spent the money we have spent on Iraq on bridges in our own country? Giant solar farms in the southwest? Healthcare? Or, if you really are concerned about terrorism, actually going after Al-Qaeda and the Taliban in Afghanistan?

    And this isn’t 20/20 hindsight. A lot of people saw the stupidity in this from the get go and were vilified in the media as being “for the terrorists”.

    It has been absolutely sickening.

    Every time I see someone defending Bush, or repeating some right wing talking point they heard on The O’Reilly Factor, Hardball, or “I’m Gonna Kick Your Ass”, usually their rhetoric is far more mean and condescending than anything the “left” has to offer. I have a difficult time not wanting to return the favor, because they have been demonstrably been proven wrong and the only thing they have to offer in their defense is more hateful or meaningless rhetoric rather than real solutions.

  35. iheartconsumerist says:

    @Tracy Ham and Eggs:

    What do you call 80,000 documented iraqi civilian deaths and an estimated 500,000+ estimated civilian deaths in a country where we are paying military contractors who aren’t accountable to any laws millions of dollars? Whether its our intention or not, sounds like we are coming pretty close to paying people to kill civilians (meanwhile when the independant government of iraq tries to ban violent mercenanries we tell them no way). “Stupid and mean spirited” you say? Killing innocent people is much more than mean spirited.

  36. Rusted says:

    @Tracy Ham and Eggs: Considering Old George’s track record to date, not exactly stupid to call him less then stellar. I wonder if the Fed will lower interest rates to the point that loans will pay interest and saving accounts will charge interest (sarcasm).