Do These 4 Things With Your Money Before Tomorrow’s Fed Decision

Tomorrow, the Fed will announce whether it plans to lower interest rates This year is the third time. Its decision will have practical significance Impact on your finances.

The Fed’s actions affect everything from the interest you pay on your debt to the interest you earn on your savings. Here’s what to do now to get the most from the Fed’s next decision.

Take these 4 funding moves before the next Fed meeting

Take these steps now to take advantage of the Fed’s expected rate cuts.

✅ Open a certificate of deposit

When the Fed cuts interest rates, deposit account interest rates tend to fall as well. This means you will earn less through accounts such as savings accounts and certificates of deposit. You can lock in today’s high interest rates by opening a CD now.

“When interest rates go down, CD rates go down with them,” said Krisstin Petersmarck, investment advisor representative at New Horizon Retirement Solutions. “So it makes sense to invest in CDs now.”

A CD is a unique type of deposit account with terms that typically range from a few months to a few years. You need to keep the money in the CD for the entire term to avoid potential risks Early withdrawal penalties. In exchange, bank or credit union You will be paid a fixed return throughout the term based on the interest rate in effect when you open the CD. Some of today’s best cd Offers an annual yield (APY) of up to 4.70%.

Matt Weller, managing director of capital markets at Phoenix Capital Group Holdings Inc., said now is “probably the last chance to lock in peak interest rates in this rate cycle.”

✅ Open a high-yield savings account

CDs are a great place to put money that you don’t need to touch for a while. and yours emergency savings? You want to keep these funds liquid while still earning maximum interest.

A high-yield savings account can help. usually composed of Internet bankinghigh-yield savings accounts offer significantly better returns than traditional savings options offered by major banks. For example, today’s Top Savings Accounts Pay at least 10 times the national average savings rate.

It’s generally easy to withdraw funds in a high-yield savings account, although you may need to be aware of withdrawal limits. For example, you may be charged a fee if you withdraw money from your account more than six times in any month.

Interest rates on high-yield savings accounts are variable, which means they tend to fall when the Fed lowers the federal funds rate. Therefore, you need to open a high-yield savings account as soon as possible to take advantage of today’s excellent APRs while you still can.

✅ Postpone large purchases

If you’re considering financing a new car or other large purchase, consider waiting.

Some loan types may adjust to changes in the federal funds rate more quickly than others. “Auto loans and home equity loans will adjust soon after the Fed rates adjust,” explains Kelly Gilbert, owner of EFG Financial. On the other hand, “mortgage rates follow Treasury bill rates and change more than Interest rates on auto loans or home equity loans are much slower.”

If you’re in the market for a new home, you may want to “investigate variable rates before making a decision,” Gilbert said. adjustable rate mortgage Although interest rates may rise after the introductory period, they are usually lower than the initial interest rate on a fixed-rate mortgage, so take this into consideration when deciding.

✅ pay off debt

Debt—especially high-interest debt—can wreak havoc on your financial stability. When you spend a lot of money on interest, that money is no longer free to save, invest, or even pay for everyday expenses.

Pay off credit cards and other high-interest debt are smart moves in any rate environment, but with the Fed preparing to cut rates soon, it might be a smart move to consider now debt consolidation loan Consolidate your outstanding debt at a lower interest rate.

Remember, now is the time to start shopping, not necessarily the time to open a new debt consolidation loan. Now, search for reputable lenders you’re interested in working with so that when interest rates start to drop, all you have to do is apply.

Related savings articles: