Central bank actions may have a practical impact on your finances. Make the most of its next rate decision by doing these things now.
Nowadays, with so much economic news, the Fed’s actions may not be on your watch list. But they have a serious impact on your finances, and at the next central bank meeting on May 6 and 7, it’s time to take some key steps to get the most out of your upcoming interest rate decisions.
Where the Fed decides to set interest rates will affect everything from savings account earnings to collateral rates. Experts believe the Fed will suspend interest rates for the third time at this week’s Federal Open Market Committee meeting. This means for your money and the full advantage you should do today.
Read more: The Fed won’t lower interest rates: What this means for your finances
Now move these four money
You can take these steps today to make the most of interest rates.
✅ Open the deposit certificate
When setting CD rates, banks tend to follow the Fed’s lead. Rate pause means there is still time to get a high percentage of yield on CDs. Even with the pause rate, APY has been falling, so if you are considering turning on a CD, then now is a good time.
“We have seen a gradual decline in CD speed, and if the Fed continues to move forward, that may continue,” said Taylor Kovar, certified financial planner and CEO of 11 Financial. “The quotes we saw last year have gone away most of the time, and I wouldn’t be surprised if rates keep falling over the next few months. There are still some good deals, especially with smaller banks or credit unions, but the windows are starting to close.”
CDs are unique deposit accounts that range from months to years. You need to leave the money in the CD throughout the term to avoid early withdrawal of fines. In exchange, the bank or credit cooperative pays you a fixed return on the entire term based on the interest rate when the CD is opened. Today, some of the best CDs offer up to 4.50% APY. Since the Fed expects to lower interest rates later this year, if interest rates fall, you can now protect your future earnings.
✅ Open a high-yield savings account
CD is a great money home that you don’t need a while to touch. But what about your emergency savings? You want to keep these funding liquids while still being able to get the most interest in them. A high yield savings account can help you solve your problem. High yield savings accounts are often offered by online banks, which are much better than the traditional savings options offered by major banks. The best savings accounts are paid at least 10 times the national average savings rate.
Although there may be withdrawal restrictions, it is often easy to access your funds in a high-yield savings account. For example, if you withdraw funds from your account more than six times in any given month, you can pay for it. Interest rates on high-yield savings accounts are variable, meaning they tend to fall when central banks lower federal funds rates. So you now need to open a high yield savings account to take advantage of the large APY if it is still possible.
✅ Stick to buy in large quantities
If you are considering funding for a new car or other large purchase, consider waiting until the Fed lowers interest rates again to avoid paying more interest fees. If you buy a new home in the market, you can buy a new home now, and mortgage rates are still high, and experts don’t want to pause to lower tax rates.
✅ Focus on repaying any debt
Debt, especially high interest debt, can really hinder your financial stability. When you spend a lot of money on interest, this money is no longer used for savings, investing, or even paying for daily expenses. In any interest rate environment, paying your credit card and other high interest debts is wise, but especially when interest rates are still high. You may also want to consider a debt consolidation loan to combine outstanding debts at a lower interest rate.
Remember, it’s time to start shopping, not necessarily when opening up a new debt consolidation loan. Currently, search for reputable lenders you are interested in using, so that when the price starts to drop, all you need to do is apply.
You can’t control what the Fed does with interest rates, but there are some wise steps you can take to make the most of its decision. Now maximize your financial situation and you will be expected to benefit from the next move of the central bank.
