The Federal Reserve has paused rate hikes for the third time this year. This move impacts loan interest rates and savings yields. Here are four financial strategies to benefit from the Fed’s rate pause.
First, open a certificate of deposit (CD). Banks often follow the Fed’s lead when setting CD rates. A rate pause means there is still time to secure a high annual percentage yield on a CD.
CDs are deposit accounts with terms ranging from a few months to several years. Some CDs today offer yields of up to 4.50%. Second, open a high-yield savings account.
These accounts, often provided by online banks, offer far better returns than traditional savings accounts.
Strategies for Fed rate pause
The best high-yield savings accounts pay at least ten times the national average savings rate.
However, their interest rates are variable and may drop when the Fed cuts rates. Third, hold off on significant purchases. If you plan to finance a new car or other large purchases, waiting until the Fed starts cutting rates again might be wise.
The housing market has not seen a decrease in mortgage rates despite the rate pause. Fourth, focus on paying down debt. High-interest debt can severely impact your financial stability.
Paying down high-interest credit card debt or other loans is a good strategy, especially while interest rates remain high. You may also consider a debt consolidation loan to combine your debt at a lower interest rate. While you cannot control the Federal Reserve’s decisions, you can take proactive steps to maximize your financial situation.
Implement these strategies to benefit from the central bank’s rate pause.