The Federal Reserve’s decision to pause interest rate hikes at its latest meeting has important consumer implications. While inflation is coming down, it hasn’t yet reached the Fed’s target. The pause allows the Fed to observe how the economy responds to previous rate increases.
Consumers can take advantage of the rate pause by making smart money moves. Opening a certificate of deposit (CD) now can lock in high annual percentage yields (APYs) before rates potentially drop. CDs require leaving money untouched for a set term but offer guaranteed returns based on the rate at account opening.
Current rates offer APYs up to 4.65%.
Consumers benefit from CD rate pause
For more accessible funds, a high-yield savings account is a good option.
These accounts, often from online banks, pay much higher interest than traditional savings accounts. Their rates are variable, so opening one now can capture high APYs while they are available. Holding off on large financed purchases like homes or vehicles could be wise until the Fed starts cutting rates again, which may lower borrowing costs.
Paying down existing high-interest debt is also smart during this time. Once rates decline, consolidating debt at a lower rate is worth considering. The bottom line is that while the Fed’s actions are outside our control, we can optimize our finances in response.
Opening a CD or high-yield savings, postponing big buys, and reducing debt are all solid strategies to make the most of the Fed’s rate pause.
