A good time to call your credit card company would be right about … now.
The Federal Reserve cut interest rates this week for the first time since 2008 during the Great Recession.
Officially, the Federal Open Market Committee lowered the target range for its overnight lending rate to between 2% and 2.25% — 25 basis points from the previous level — to stave off an economic downturn.
What does that mean for you? Lower interest rates.
But you have to ask.
How the Interest Rate Cuts Affect You
If you’re a borrower, you could save money on the interest you’re paying on your debts.
Credit cards, auto loans and home equity loans could all see reductions in the interest you pay each month.
To get the most out of this change, do not wait for your lender to lower your interest rates. We repeat: Do. Not. Wait. Call your lender today and ask for a rate reduction on your account now. (And in case you need a reminder, here’s an explanation why you’re wasting money by carrying a credit card balance.)
If you regularly carry credit card balances, you have a lot to gain, considering interest rates have steadily increased over the last five years — the current average interest rate is more than 17%.
We have plenty of strategies for lowering your credit card interest rate, but this call should be an easier one to make since you have hard proof that interest rates across the country are lower.
Mortgage rates are already at historically low rates, and adjustable rate mortgages generally reset annually, so the rate cuts won’t affect mortgages as much or as quickly.
Federal student loan rates are fixed, so they won’t be affected by the rate cut, at least in the short term. However, if you have private student loans, now may be the time to refinance your loan at a lower rate.
Unfortunately for savers, the rate cut also means you’ll earn less in interest on your savings accounts. Fortunately, we have a beginner’s guide to investing to help you earn more on your money.
Tiffany Wendeln Connors is a staff writer/editor at The Penny Hoarder. Read her bio and other work here, then catch her on Twitter @TiffanyWendeln.