Blog posted On May 05, 2020
Last week, the Federal Open Market Committee voted to leave the benchmark interest rate unchanged, as the economy recovers from the mass closures of the coronavirus pandemic. Some states are starting to ease coronavirus restrictions and reopen businesses while continuing to observe social distancing procedures.
Many Americans are making sense of how the economic slowdown from the coronavirus will impact their finances. Here are four money moves you can make while interest rates are low.
Refinance Your Mortgage
Even if you bought a home in the past few years, you could benefit from a mortgage refinance. A rate and term refinance could help you lower your mortgage payment and lock in a lower interest rate for the life of your loan. You could also use a mortgage refinance to withdraw home equity through a cash-out refinance. A cash-out refinance could help you cover immediate expenses while you’re experiencing a temporary reduction in income. It could also give you the funds to reinvest in your home and increase its value.
If you have any questions about a mortgage refinance, talk to your lender. You can also try out our refinance mortgage calculator at the top of the page.
Pay Down Credit Card Debt
If you have any credit card debt, it’s likely your highest interest debt. Credit cards typically carry higher interest rates than other nonrevolving debts like student loans and car loans. You can consolidate credit card debt with a lower interest personal loan. You could also use a balance transfer from your current high interest credit card to a lower interest credit card.
If you are still employed and you still have an income coming in, do not stop paying your bills, especially your debt. Reducing your monthly debt increases your monthly cash flow.
Review Savings Accounts
Lower interest rates lower the cost of borrowing money, but it also means you’ll be earning less interest on money that you are saving. This could be a good opportunity to take a look at a high yield savings account to maximize the amount of interest you earn on your savings. You could also look into certificates of deposit (CDs). Interest rates on CDs will trend lower but have not caught up with the recent Fed rate cuts just yet.
Near-zero interest rates can be an opportunity for you to benefit financially in the wake of a global economic slowdown. If you have any questions about today’s interest rates, let us know.