The Federal Reserve will meet again from April 30 to May 1, 2024, to discuss adjusting the federal funds rate, the benchmark lenders use to determine the cost of borrowing.
After the March 2024 gathering, the central bank indicated there could be as many as three quarter-percentage point cuts this year. But, as time goes on, that appears to be less of a certainty.
The target rate has held steady since July 2023, when it was raised a quarter of a percentage point to 5.25% to 5.5%, the highest in over 20 years. The fed funds rate hasn't been cut since the start of the pandemic, when the Fed slashed it to zero.
Below, CNBC Select shares three money moves to consider to before the next rate cut.
Open a high-yield savings account
When the Fed lowers the federal funds rate, savings accounts' annual percent yields (APYs) typically drop in tandem. Even so, a high-yield savings account (HYSA) should provide a stronger return than a traditional savings vehicle.
LendingClub High Yield Savings accounts have an APY of 5.00%, more than ten times the national average, according to the FDIC. Plus, there are no monthly fees or balance minimum requirements beyond an opening deposit of $100.
LendingClub High-Yield Savings
Annual Percentage Yield (APY)
5.00%
Minimum balance
No minimum balance requirement after $100.00 to open the account
Monthly fee
None
Maximum transactions
None
Excessive transactions fee
None
Overdraft fees
N/A
Offer checking account?
Yes
Offer ATM card?
Yes
Terms apply.
The APY in a Synchrony Bank HYSA isn't as high but, at 4.75%, it's still competitive — and there is no minimum deposit requirement. Both banks offer free ATM cards with unlimited transactions (up to a daily limit of $500 to $2,000, depending on your account) but Synchrony will refund other banks' ATM fees up to $5.
Synchrony Bank High Yield Savings
Annual Percentage Yield (APY)
4.75% APY
Minimum balance
None
Monthly fee
None
Maximum transactions
Up to 6 free withdrawals or transfers per statement cycle
Excessive transactions fee
None
Overdraft fee
None
Offer checking account?
No
Offer ATM card?
Yes
Terms apply.
Lock in CD rates
Certificates of deposit (CDs) have fixed rates, so if you take one out now you won't be impacted if APYs go south later in 2024. A 12-month CD at Barclays has an APY of 5.00%, with no minimum deposit requirement or monthly fees. And while most banks compound interest on CDs monthly or quarterly, your interest will compound daily.
Barclays CDs
Annual Percentage Yield (APY)
From 3.50% to 5.00% APY
Terms
From 6 months to 60 months
Minimum balance
None
Monthly fee
None
Early withdrawal penalty fee
A penalty may be charged for early withdrawal.
Terms apply.
Find the best savings account
Start shopping for a new home
If you paused house-hunting because mortgage rates were too high, now might be the time to hop back onto Zillow. The Fed doesn't directly impact mortgage rates but how it treats the federal funds rate influences what mortgage lenders charge.
On April 18, 2024, the 30-year fixed-rate mortgage rate broke 7% for the first time this year.
The largest mortgage lender in the U.S., Rocket Mortgage offers fixed-rate terms of anywhere from 8 to 30 years. It ranks high on J.D. Power's 2023 Mortgage Origination Satisfaction Study and, for those with less-than-stellar credit, Rocket considers applications from borrowers with scores as low as 580.
Rocket Mortgage
Annual Percentage Rate (APR)
Apply online for personalized rates
Types of loans
Conventional loans, FHA loans, VA loans and Jumbo loans
Terms
8 – 29 years, including 15-year and 30-year terms
Credit needed
Typically requires a 620 credit score but will consider applicants with a 580 credit score as long as other eligibility criteria are met
Minimum down payment
3.5% if moving forward with an FHA loan
Already have a mortgage through Rocket Mortgage or looking to start one? Check out the Rocket Visa Signature Card to learn how you can earn rewards
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FAQs
How low will interest rates drop in 2024?
It's difficult to predict how interest rates will change but, in December 2023, the Fed predicted it would lower the federal funds rate to 4.6% by the end of 2024. That's the rate banks charge each other to borrow money, so it directly impacts the rate consumers pay.
What will rate cuts mean for homebuyers in 2024?
When the federal funds rate is cut, mortgage rates typically follow suit. Lowering the cost of borrowing creates more opportunities for prospective homeowners.
Who benefits from higher interest rates?
Bond buyers and those with CDs, money market accounts and other savings vehicles often benefit from periods of higher interest rates.
Bottom line
The Federal Reserve has predicted at least three rate cuts in 2024. Consumers should adjust their financial strategies to prepare for them.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of financial products. 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, and we pride ourselves on our journalistic standards and ethics.
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