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What Cutting Interest Rates Means for You as a Consumer

The Federal Reserve Board reduced interest rates in September for the second time in the last 10 years. Interest rates represent the cost of debt. A reduction is a good thing in most situations. Let's take a look at the positives and the negatives.


Mortgage Rates - POSITIVE EFFECT

If you are buying or refinancing, you need to get going while interest rates are as low as they are right now. This definitely has a positive impact on mortgage rates. In fact, if you took out a new loan even a year ago, it might make sense to refinance it again. There is that much of a difference between rates 12 months ago and today.


Car Loans - POSITIVE EFFECT


If you bought a car last year, it might be smart to refinance. Most people don't think of refinancing when it comes to car notes. It can make sense and is definitely a money saving option. Lower interest rates mean lower interest costs!


Credit Cards - NEITHER POSITIVE OR NEGATIVE


This is a wash! Sure credit card rates could go down by .25%. Yet, does it really matter? After all, they are already so high. It brings a high interest rate down marginally.


Savings - NEGATIVE


That is all we need is the already low interest rates on savings products to go even lower. Interest rates are so low as it is that an interest rate cut of any degree is a negative.  


The Economy - POSITIVE SHORT-TERM; NEGATIVE LONG-TERM


A cut in interest rates is supposed to help the economy. The question comes down to this  - Do we even need rates to be cut? For President Trump's re-election bid the answer is yes. For the real reason that interest rates are reduced I would say no. Said another way, it might do so in the short-term. However, in the long-term, this is a horrible decision. We have no business reducing interest rates right now.


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