What the Fed's .50 rate cut means for Helocs & Credit Cards.
I heart CNN like crazy, they are REALLY on top of their ish over there! I'm signed up to their "Breaking News" text alerts they've got going on, and i was alerted @ 7:22am this morning about this .50 key rate decrease!If you're a news whore like me, all you have to do is text "alerts" to 26688 and sign up, it's totally free from them (you might have to pay for txt messaging if your plan doesn't cover it), and they usually come like once or twice a week....or even 6 these days ;) But i digress...
This new cut by the Fed affects a whoooooooole lotta things out there. And I don't know about you (although i'd like to!), but here are the ways that it impacts my own situation. And i'll give you a hint - i'm pretty happy about it.
What this means for my HELOC. This means total greatness! Since our Home Equity Line of Credit is tied to the Prime Rate (which will in turn go down the .50), our adjustable rate will also now slide. Holler! Currently @ 4.55%, it'll now be a crazy low rate of 4.05%!!! how crazy is that? And you know it's bad out there when my 2nd mortgage is a whole 3 points BELOW my 1st mortgage (6.875%)! haha... (Thank GOODNESS I didn't lock in our Heloc rate @ 7.72% back in June!)
What this means for my Credit Cards. This also means greatness! Most credit cards are based on the prime rate + or - some points, so as that goes down, so does the % charged! Anything can happen in today's market, but right now this means that i'll also see a hefty drop of .50% on any non-paid off credit card purchases, bringing my interest rate down to 4.5% now. Of course, i don't really have any c/c debt that isn't locked in at a great rate anyways, so this is really just potential greatness we're talking about here.
What this means for my savings. Not so good :( It's all about even stephen though, isn't it? luckily/unluckily i don't have much in our savings at this point anyways, so i wont' feel a hit on interest income there, but i DO have a nice pile in our Emergency Fund ($4k+) which is set in a money market account. I'm sure we'll start to see lower returns in there, but i have to admit i'd take the rate cut over this anyday! Selfishly speaking, that is ;) The economy going up would be best overall.
What this means for overall. Now's a helluva good time to find a great loan @ a great price! That, and the economy is getting scarier by the day...but you already knew that.
So what does all this mean TO YOU? Will this benefit your own financial gameplan? Everyone has their own way of workin' in out, so i'm always curious to see what everyone's up to out there. Anyone have even better rates? And if so, can i borrow some moeny ;)
Labels: crazy economy, credit cards, federal reserve, helocs, interest
posted by J. Money at
11:06 AM
7 Comments:
My friend called me about the .5 vs. the credit card but like you, it's potential greatness. With the exception of my monthly use and pay off, the credit cards are locked in at 2.9 and 3.9 for life of the balance so I'm non-plussed about that. Also won't affect my student loans because those are all fixed.
What I wonder though...how low can you go. If this doesn't fix it, then what? Oddly enough, I just e-mailed my old econ professor to ask her thoughts on this.
ooooh YES that is a fan-freakin-tastic question! Like, the lowest we can physically go is 0% right? Like worst case? But has that ever happened in the history of the world?
Promise to let us know what your econ professor says, okay?! You've got me all sorts of curious over here...perhaps she can guest post for you!
Our one credit card is fixed at 2.99% and I think my other one is fixed (though I'd have to check - it's a one-year promotional rate) at 5.99%. Student loans from first school are consolidated and are at a fixed rate. Not sure about my second school loans. No car loans or mortgages here (sort of wish I had a mortgage though, 'cause it would mean I had a house instead of an apartment), so nothing to look at there.
@living in nyc - I'm interested to hear what your econ professor thinks, too.
If the US savings rate can go negative when is the government going to start a negative interest to loan money out? How about -1% to borrow their money?
Then we could really screw up our country even more than they have done already!
Yes I am being cynical, but I feel strongly that this market condition was inevitable, and that the government intervening is not helping but at most is doing its best to stretch out the time that it will take to turn things around. Would you rather take one big hit and then be done, or just keep getting hit left and right for a long time?
locked in c/c rates are killer! i've only started using these lock-ins this year, and glad i did :)
@ philip - good point my friend! -1% would sure be interesting, and sadly enough no that farfetched...
and freakin' GREAT "would you rather"! (i might have to steal that). I would much rather get hit big right now, and start to recover than slowly but surely pull my hair out month after month. thx for the comment bro.
@philip
a negative interest? now that's interesting. i hadn't thought about that.
@everyone
that's awesome you guys have such low interest rates on your credit cards.
out of curiosity and if you don't mind sharing, what credit cards/programs do you use or used, and what are your credit scores?
@budgets
congrats on your 4k emergency fund. i am still < 2k, but hopefully sometime in the near future my funds will be more plentiful.
I use USAA's Platinum World Mastercard, and my FICO score is around 750. Hope that helps!
Post a Comment
Links to this post:
Create a Link
<< Back to Budgetsaresexy.com