In a surprise to no one, the Federal Reserve declined to cut the federal fund rate at its April gathering.
Lowering the target rate makes it easier for consumers to access credit cards, auto loans and other forms of financing. Increasing it raises the cost of borrowing, but can make CDs and high-yield savings accounts more attractive.
Thanks to a strained labor market and inflationary pressures from the war in Iran, most experts aren't expecting a cut until December or even into 2027, according to the CME Group FedWatch.
But that doesn't mean you should sit on your hands until Christmas.
"I always try to help my clients build something that works no matter what the Fed does," Don Grant, a CFP at Sabre Wealth Management, told CNBC Select. "The bottom line is the importance of planning — having a financial life that isn't based on what the Fed might or might not do, but one that's designed to weather the storm."
See if a debt relief program is right for you
Money moves for any rate scenario
Tackle high-interest debt
Regardless of whether the Fed raises or lowers its benchmark rate, paying down high-interest debt is always the right move. Credit card bills are a big culprit, and interest rates on cards are already so high that a small decrease wouldn't make much difference.
One popular strategy for tackling credit card debt is a balance transfer card with an introductory 0% APR period. This will stop the clock and give you months to pay your bill without accruing additional interest. It's only wise if you have a plan to pay the full balance by the end of the intro period, you'll just be hit with another hefty APR.
The Citi Simplicity® Card has one of the longest interest-free periods on the market, while Chase Freedom Unlimited® includes a welcome bonus and cash-back rewards on everyday spending.
The Citi Simplicity® Card may not earn rewards, but it can still save you money due to its amazing intro-APR offers.
- One of the longest intro APR offers for balance transfers
- No annual fee
- No rewards
- No welcome bonus
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus.
- Users get a high rewards rate and strong welcome bonus
- Purchases and balance transfers get long intro APR
- No annual fee
- Travelers face a foreign transaction fee
- Few rewarding ongoing benefits
Highlights
Highlights shown here are provided by the issuer and have not been reviewed by CNBC Select's editorial staff.
- Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Enjoy 5% cash back on travel purchased through Chase TravelSM, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
- No minimum to redeem for cash back. You can use points to redeem for cash through an account statement credit or an electronic deposit into an eligible Chase account located in the United States!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.24% - 27.74%.
- No annual fee – You won't have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, in the first 60 days. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3% of each transaction in U.S. dollars
If you have several high-interest balances or need more time to pay down your debt, you may be better off with a debt consolidation loan. Instead of paying multiple creditors, you'll have one monthly payment, ideally with a fixed lower rate.
Achieve accepts borrowers with bad credit (a FICO Score of 620 or less) and approves loans ranging from $5,000 to $50,000 and terms from two to five years. The digital personal finance company offers a rate discount if you agree to send funds directly to your creditors. Achieve also has a debt relief program, with agents who will negotiate with creditors to accept less than the full balance.
Flexible term lengths
- Flexible term lengths
- Rate discounts available
- Works with borrowers with fair credit
- Loans may not be available in all states
- The lender charges origination fees
Maximize your savings
When the Fed lowers its benchmark rate, the return on savings accounts usually declines, as well. But if you have your money in a high-yield savings account, you'll still be earning more than ten times the national average savings rate.
Find an account with zero monthly fees, no minimum deposit or balance requirement and an easy means to withdraw cash when you need it.
Lock in fixed rates
It's easier to budget if your monthly obligations are predictable. If you need to borrow or are looking to refinance, opt for a fixed-rate loan. No matter what happens with interest rates, that loan payment will stay the same.
Even if it means being locked into a slightly higher rate, you'll have peace of mind. In a year, rates could go back up and you'll be happy you chose a fixed-rate loan that's less vulnerable to fluctuations.
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Meet our experts
At CNBC Select, we work with experts who have specialized knowledge and authority, grounded in relevant training and/or experience. For this story, we interviewed Don Grant, a Certified Financial Planner at Sabre Wealth Management in Wichita, Kansas.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice to help them make informed financial decisions. Every personal finance article is based on rigorous reporting by our team of expert writers and editors. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties. We pride ourselves on our journalistic standards and ethics.
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