The Fed Just Cut Interest Rates – Here’s What you NEED to Know for Your Money & Goals

Welcome back to another edition of "Rolling in Dough" Newsletter, where we serve up the simplest ways to save more, spend less, and build wealth with regular insights, consumer psychology hacks, and tiny tips to do today. I hope to make your financial journey a little fun, simple, and totally doable, where ever you are on your wealth journey.

Why This Matters:

For the past few years, the Fed has been going up on interest rates to try and slow high inflation — how expensive things like groceries, gas, and more have been.

So, when prices started going up, the Fed raised interest rates to make loans—like for cars, homes, and some credit cards—more expensive.

Because, when people take out fewer loans and spend less, it ideally helps slow down how fast prices are rising in the economy.

But now, inflation is starting to cool off as prices on everyday things come down, finally. So, the Fed is bringing down interest rates to make loans cheaper again.

The goal here is: since prices aren’t rising as fast anymore, they’re making loans more affordable so people feel comfortable getting home loans, car loans, and using credit cards again.

They may keep lowering rates over the next few months, depending on how things go, to keep the economy moving in the right direction.

👍️ Credit Cards: Good.

Most credit card interest rates are variable, meaning the interest rate changes. So, because of this interest rate cut, your credit card interest could go down over time.

If you’ve got a balance, your rate won’t drop instantly.

But as interest rates go down, you’ll start seeing smaller interest charges, which means more of your payments will go toward reducing the actual balance that you owe—not just the interest.

That’s a good thing because that credit card can get paid off even faster with more of your payment reducing what you owe. Yass!

👍️ Student Loans: Could be Good.

For federal student loans (Sallie Mae and ‘nem), nothing changes.

But if you’ve got private loans (like through a bank) with a variable interest rate, the interest cut could mean you’re paying less in interest—leaving more money to go toward paying off your actual loan balance. This is a similar situation as credit cards.

How to Find ‘Variable’?

You can look on your monthly statements, usually near the end, to see what your interest rate is and whether it's variable or not.

It will usually have the letter “v” beside it, which means your interest rate changes often, and with the Fed interest rate cut, the ‘variable’ rate will likely go down. This is good news for credit and loans.

👍️👍️ Cars & Homes: GREAT.

If you already have a car loan or home mortgage, your rate stays the same (unless you refinance in the future).

But if you’re shopping for a car or house soon, this is great news—these lower interest rates could mean smaller monthly payments on new loans. This helps make home ownership even more affordable and attainable for so many people.

👎️ Savings Accounts: Not Good.

Now, about your savings. Fed cuts are great news for loans but not so great for savings.

Since the Fed is cutting rates, your savings account will likely earn less interest.

In other words, your money won’t make as much money from interest as it used to.

This applies to things like high-yield savings accounts, CDs, and money market accounts—so keep an eye on those numbers over the coming months.

How to Make It Work for You:

So, what should you do next?

Pay Down Debt: 

You can focus on paying down high-interest credit card debt. As rates drop, you’ll pay less and less in interest, which means you can knock down your debt faster.

Plan for Big Purchases & Goals: 

If you’re in the market for a car or house, watch for even lower rates. Lower rates mean lower monthly payments, so don’t rush, but be ready to act because we expect more rate cuts in the coming months. This can make homes more affordable for a lot of people, with lower monthly payments.

Get Creative with Savings: 

If your savings account is earning less, think about other ways to grow your money. High-yield accounts still work, but it’s worth looking at other options like investing.

If you want to get started investing and need a great first stock recommendation, check out this quick 2-minute video.