Earlier today, Federal Reserve Board Chairman Ben S. Bernanke announced that he’s prepared to lower the interest rates another half percentage point. That would take the current 4.25% interest rate down to 3.75%. This could be good news for you, or it could be bad news for you – it depends what your situation is. So, if the rate is actually cut on January 28th, what kind of impact will it have?
1. Variable rate loans: the interest rate on variable rate loans will go down. If you have this type of loan, this would be a good opportunity to make some extra payments to pay down the balance.
2. Variable rate credit cards: cards tied to the prime rate will see an interest rate decrease, too. Depending on your situation, it may be a good time to make extra payments on these cards.
3. Savings account interest: these accounts will also see a rate decrease. However, unlike loans and credit cards, this doesn’t work in favor of savers.
