How to check your finances when loan rates and savings rates pull in different directions<\/p>\n\n\n\n
On the day news broke that the benchmark interest rate had been cut, twice as many people as usual crowded the bank\u2019s service desks. In one line stood people asking when their loan rates would drop and others worried about how far their savings rates would fall.<\/p>\n\n\n\n
A rate cut is welcome news for some and the start of a dilemma for others. The same headline means something different in every home because each household\u2019s finances are structured differently.<\/p>\n\n\n\n
Households with variable-rate borrowing see their interest burden ease within a few months. Experts advise using the savings to pay down a bit more principal rather than spending more, because rates can rise again.<\/p>\n\n\n\n
\nWhen rates fall is the best time to cut your debt. You have to build up your strength the moment you get some breathing room.<\/p>\nA household financial counselor<\/cite><\/blockquote>\n\n\n\n
Savings Accounts and CDs<\/h2>\n\n\n\n
Savings rates will soon follow downward. If a deposit is about to mature, it is worth looking at products that lock in today\u2019s rate for a little longer. Above all, for an emergency fund, being able to withdraw it anytime matters more than the rate.<\/p>\n\n\n\n
\n
- Check each loan\u2019s rate type and remaining term<\/li>\n\n\n\n
- Put the interest savings toward principal first<\/li>\n\n\n\n
- Reinvest maturing deposits in staggered terms<\/li>\n\n\n\n
- Keep three months of living expenses aside as an emergency fund<\/li>\n<\/ul>\n\n\n\n
We cannot set interest rates, but we can decide how to respond to them. A good start is to open this month\u2019s budget and write down your loan and savings numbers again.<\/p>\n","protected":false},"excerpt":{"rendered":"
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