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What the Fed’s .50 rate cut means for Helocs & Credit Cards.

by J. Money on Wednesday, October 8, 2008

cnn is awesomeI 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 ;)


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