What the Rate Cut Means For Consumers

We’re over it.

Zero or a quarter of one percent, you won’t see us—consumers—doing much more than shrugging our shoulders now that the Fed has lowered rates to the lowest of the lows. The real drama lies in rate cuts months ago when the numbers were closer to 5%.

We’ve since learned some big lessons in this New Economy that tell us how things really will turn out. Fed rate cuts have not translated into lower rates on our credit cards, as the credit crunch pretty much squashed those hopes. Mortgage rates have been moving to their own beat for a while and though we enjoy a cheaper HELOC, it’s still a variable rate loan on less house than we owned two years ago.

And then there’s our saving grace, if but for another week or two: Lock in some high-interest CDs now (4% still stands on a 1-year today) and enjoy high-yield savings accounts for a bit longer. Banks still need your money and will compete to get more and keep more, but paying good money to hold or borrow yours won’t hold for much longer, so jump on that CD train pronto. We are, however, unsure about one thing: Will this move do anything to prop up the economy and markets to get them at least to hold still so we stop sliding downward? I think the Fed is asking the same. Shrug.