Brought to you by the Every Dollar app. Start budgeting for free today. Today's question comes from Ian in Maryland. The Federal Reserve cut interest rates recently. How long will it take for people to see any real impact from that decision? Also, my high-yield savings account is paying me over 5%. Should I expect to see that rates to start coming down in your

opinion which rate is more important to the economy the rate we pay to borrow money or the rate we

get paid for saving money a few layers in this question let's start with the first one how long will

it take for people to see any real impact from the fed rate cuts well depends on the type on the type of debt. Mortgages are going to

take longer to be affected. It's not a direct relationship, whereas things with variable rates,

credit cards, student loans, car loans will be impacted sooner rather than later.

Well, my experience is credit cards don't move at all. They charge a bazillion dollars in

interest, and they will continue to charge exactly a bazillion dollars in interest, 18, 22, 24,

28 percent, whatever it is. And they don't move that up or down based on the Fed rate. The Fed

rate is what banks borrow money from other banks at.

It's the wholesale banking rate.

Okay?

So if your bank is paying less to borrow money from another bank, then they don't have to charge you as much interest on the debt that they are issuing.

So local bank or bank debt, credit cards are not

affected at all. Maybe home equity loans might see a little movement. Maybe car loans might see

a little movement. As George said, mortgage interest rates are not determined by the Fed at all.

They're determined by the bond market. Now, they generally follow the Fed, but they're not, they're not directly connected in any way. It's just trending,

prevailing interest rates is all that drives that. And so a half a point dropped by the Fed

45 days before a national presidential election,

hmm, which basically does nothing, is what I'm saying.

It's not going to affect your high-yield savings account probably at all.

Half a point, one.

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