Today’s Federal Reserve meeting may not be widely noticed amid economic concerns, but its decisions affect personal finances. The Fed is expected to keep interest rates steady at the July 29-30 meeting, meaning savings and borrowing rates will remain high for now. However, rate cuts could begin as early as September. Taking timely financial actions could help manage earnings and costs effectively.
One recommended move is to lock in a high annual percentage yield (APY) by opening a certificate of deposit (CD). CDs offer fixed returns based on rates at the time of opening and require leaving money untouched for a set term. With rate cuts expected, securing higher rates now can protect future earnings, as APYs are likely to decline in the fall. Financial planner Dana Menard suggests locking in current rates if the funds are not needed immediately.
For emergency savings, a high-yield savings account is advised. These accounts provide better returns than traditional savings, often paying at least ten times the national average. Funds remain accessible despite possible withdrawal limits. Since savings rates tend to fall when the Fed lowers rates, current high offers may not last long, according to financial expert Taylor Kovar.
It is also recommended to delay large purchases that require financing, such as a car, until rates decrease to avoid high interest costs. Home loan borrowing rates are expected to remain high and are less directly influenced by the Fed’s rate changes.
Finally, focusing on paying down high-interest debt is advised. Reducing credit card and loan balances can improve financial stability, as less money will be spent on interest payments. Considering debt consolidation loans at lower rates may also be beneficial when rates decline later this year.
While the Fed controls interest rates, individuals can take strategic steps to better manage their finances amid changing monetary policies.
