Expert tips for money moves after a rate cut
CNET: Experts predict the next rate cut will be 0.25%
(InvestigateTV) — NerdWallet found 61% of Americans plan to take some financial action once interest rates go down, which could happen as early as next week.
Sara Rathner with NerdWallet SAID that could impact the cost of buying a car, refinancing a loan, or even investing for consumers.
“They could use this as a time to finally shop around for a car if they were planning to finance that purchase,” Rathner noted. “Or refinancing their mortgage, especially if you bought your house about a year ago when mortgage rates were around 8 percent. Now they’re closer to 6 percent, so it could be a moment to refinance your mortgage depending on what your rates are.”
Rathner said interest rate cuts, if they happen, typically happen pretty slowly and methodically. Most experts are saying if it’s dropped it would likely be around a quarter of a percent, which could have a bigger impact for mortgages and car loans.
“But credit card debt, it’s still going to be expense,” she cautioned. “You’re not going to save too much money per year on interest when rates go down by a quarter of a percent. And credit card debt is always an expense no matter what the fed decides to do, that’s because it’s a short-term unsecured loan, so by its very nature it’s going to charge very high interest rates.”
Rathner said those with credit card debt should not wait for the fed. They should start making a plan now to tackle it and pay it down as quickly and as aggressively as possible.
She suggested that people with debt should try freeing up money in their budget by cutting back on things they don’t really need, then applying those funds directly to the debt.
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