Fed Up with High Rates? Here’s How a Cut Impacts Your Loans and Savings

NerdWallet's Smart Money Podcast

NerdWallet Personal Finance

Business, Education, Investing, How To

4.2 • 665 Ratings

🗓️ 18 September 2024

⏱️ 14 minutes

🔗️ Recording | iTunes | RSS

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Summary

Learn how the Fed’s interest rate cuts may affect your loans, savings, and investments, as well as what to do about refinancing. How could interest rate cuts affect credit card debt? Will it be easier or cheaper to get a mortgage or auto loan with interest rates going down? Is now a good time to refinance? Hosts Sean Pyles and Anna Helhoski break down how the Federal Reserve’s expected interest rate cuts could impact your finances. They discuss the potential impact on credit cards, mortgages, and savings accounts, as well as how these changes might influence borrowing and investing decisions. Then, Sean and Anna cover some of the top money headlines from the past week, including the latest inflation figures, household income trends, and new developments in student loan servicing following the Consumer Financial Protection Bureau’s lawsuit against Navient, formerly known as Sallie Mae. Refinancing your student loans can save you thousands or lower your monthly payment. NerdWallet has a tool to help: https://www.nerdwallet.com/refinancing-student-loans In their conversation, the Nerds discuss: interest rate cuts, Federal Reserve, mortgage rates, credit card debt, loan refinancing, auto loans, savings accounts, inflation trends, household income, student loans, personal loans, CD rates, adjustable-rate mortgages, refinancing, high-yield savings, financial planning, debt consolidation, interest rate changes, fed rate cut, mortgage refinancing, investment strategies, federal student loans, FAFSA, CFPB, inflation report, personal finance tips, money headlines, inflation rate, mortgage interest rates, loan interest rates, private student loans, car loan refinancing, variable interest rates, economic data, financial markets, personal debt, interest rate savings, cost of borrowing, and loan interest. To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [email protected]. Like what you hear? Please leave us a review and tell a friend. Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Welcome to Nerd Wallet's Smart Money podcast. I'm Sean Piles.
0:09.4	And I'm Onahil Hoski.
0:11.1	And this is our weekly Money News Roundup, where we break down the latest in the world of finance to help you be smarter with your money.
0:17.5	We'll go deep into a single topic and then leave you with the latest money headlines.
0:22.0	Today, we're talking about what we've all been waiting for, interest rate cuts. That's right. The
0:27.1	Federal Reserve is expected to cut interest rates, but what does that actually mean for you? In essence,
0:32.5	it means you might catch a break if you want to get a mortgage, a new credit card, or an auto loan.
0:37.2	But there's more to
0:38.4	it than just that, and Sean and I will dive into it. First, some context setting. Way back in March
0:44.4	2022, the Federal Open Markets Committee, will refer to it as the FOMC, started raising the federal
0:51.0	fund rate in response to quickly growing inflation.
0:58.0	Listeners, if you don't know the federal fund rate, it's the interest rate that U.S.
1:01.2	banks pay to one another to borrow or loan money overnight.
1:07.0	The Fed rate affects interest rates on everyday consumer products like loans, and it's set by the FOMC.
1:08.6	That's the monetary policymaking part of the Federal Reserve. So from March 2022 on, the FOMC. That's the monetary policymaking part of the Federal Reserve. So from March
1:13.1	2022 on, the FOMC hiked interest rates 11 times before stopping in July 2023. For the Fed's next
1:21.1	eight meetings, it left interest rates paused at 5.25% to 5.5%. But last month, Fed Chair Jerome Powell finally gave a clear sign that the Fed would be making a cut at its September meeting, which ends today.
1:34.8	We'd like to note that the newly slash target interest rate would still be much higher than the near zero rate that was set in early 2020.
1:43.1	It's unlikely there will be too many immediate effects
1:46.1	from such a small rate cut. There also tends to be a lag in fed rate decisions and the rates you
1:52.0	actually see out there in the wild. But it's still a big deal and it likely signals several
1:56.9	more rate cuts down the line that could have a bigger impact. So what happens next?
	...

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