Everything from student loans, car loans, mortgages and credit cards will be impacted once the Fed starts cutting interest rates.
Everything from private student loans , car loans, mortgages and credit cards will be impacted once the Federal Reserve starts cutting interest rates., a key inflation gauge, dipped in June for the first time in more than four years, the Labor Department reported last week.
The federal funds rate, which is set by the U.S. central bank, is the interest rate at which banks borrow and lend to one another overnight. Although that's not the rate consumers pay, the Fed's moves still affect the rates they see every day on things such as private student loans and credit cards. Private student loans also tend to have a variable rate tied to the prime, Treasury bill or another rate index, which means once the Fed starts cutting interest rates, the interest rates on those private student loans will start dropping.
For now, top-yielding online savings accounts and one-year CDs are paying more than 5% — well above the rate of inflation."One thing you may want to do is consider investing any idle cash you have into a higher-yielding money market fund," said certified financial planner Howard Hook, a senior wealth advisor with EKS Associates in Princeton, New Jersey.
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