Adjusting your finances for when and if the Fed cuts rates

Despite the uncertainty surrounding the Federal Reserve's interest rate cut timeline, investors remain optimistic, with over 74% of traders anticipating a rate cut by September. To navigate these uncertain financial waters, Founder and Head Lawyer of Tayne Law Group Leslie Tayne joins Wealth! to offer guidance on money management strategies.

Tayne highlights the significance of potential rate cuts for consumers, stating, "as a consumer, this is an important number." She notes two impacts: lower rates could stimulate borrowing, benefiting consumers seeking loans or mortgages. However, she cautions that savings like CDs and high-yield savings accountswill likely see less returns. Given this outlook, Tayne advises, "now might be the time to lock in those higher rates."

Recognizing the impact of interest rates on finances, Tayne stresses the importance of financial review: "You want to consider your budget at all different times, and a rate cut is a great time to re-look at your budget."

For more expert insight and the latest market action, click here to watch this full episode of Wealth!

This post was written by Angel Smith

Video Transcript

The chances of a September rate cut are growing over 74% of traders are betting on one at the upcoming September Fed meeting.

But do you know what to do with your money if cuts actually come to discuss?

Let's bring in Leslie Tane, who's the Ta law group founder and head lawyer here with us, Leslie.

Thanks so much for taking the time and joining us here on Yahoo Finance.

So what, what should people do?

They see that first interest rate cut finally come through fed chair Powell takes the lectern and says, here's why we did it and here's what the pathway going forward looks like here as well.

But a lot of people still trying to figure out how not to fight the Fed, but anticipate what they're doing.


If the feds do cut rates, it's something to keep a watch on as a consumer.

These are important numbers when the rates come down, there's lots of opportunity for borrowing.

So at this time, if you're looking for, uh to borrow certain monies like in the housing market or otherwise, you might want to hold off larger purchases to see if the rates actually come down if the rates come down.

And the converse to that is if you have saved and C DS, when the rates come down, your savings account rate will come down.

The same with C DS.

Now might be the time to lock in higher interest rate on savings accounts and C DS.

When's the time to refinance when those rate cuts start to come through?

A lot of people are gonna be sitting on the edge of their ergonomic chairs trying to figure out.

Ok. Now, now do we refinance or do we wait for later rate cuts?

No doubt it's the time to watch it if you have taken out a mortgage or a high interest rate debt over the last year, year and a half when interest rates were at their highest.

It is the time to watch the market to see when to pull the trigger on the refinance those that have great rates from several years ago at 3% or hovering around 3%.

Now, it still would not be the time to refinance that, but as the rates come down, you definitely want to watch the market because a quarter point may not make a difference in the refinancing.

You wanna look for larger rate cuts or additional rate cuts as time goes on.

It's possible, we may see a quarter percent um rate cut by the end of the year.

So coming in the new year in 2025 that's the time to watch the Feds and see what's gonna happen in the upcoming year.

Certainly, when you think about how people need to potentially adjust their budget, what type of considerations should they take into account?

You want to consider your budget at all different times rate cuts is, is another time to re look at your budget savings accounts.

If you're living off savings or investments and the interest rates are going down, then you may find that you don't have as much income borrowing can increase during that time because the rates are down.

So it does encourage those consumers and businesses to start borrowing and spending.

So that's the time to see.

Well, in my budget, where do I need to be to purchase new items?

Uh even uh everything that might be considered something on credit from cars to houses and, and even your savings.

So it's important to be looking at your budget on a regular basis, especially if your budget and your income is impacted immediately by rate changes.

And then just lastly, Leslie while we have you here, some of the large purchases that people might put back on the docket or at least start kicking the tires on both literally and figuratively, I guess in some cases here, you know, how should they be really running the calculus on when to make those purchases?

Some of it is based on need and timing.

If you understand, let's say you have a car that's at the end of its life or lease.

And you're, and you're looking to refinance or purchase a new vehicle that you're going to buy on credit.

It's the time to be watching that and saying, how long can you hold off doing that?

If you have a low interest rate to begin with on, on vehicles or other uh interest related debt, then you want to hold on to that as long as possible without refinancing.

Remember, there's always a cost of refinancing and buying anything borrowing money comes not only with the interest rate but the cost for borrowing money.

So if you have low interest rate on, on some revolving credit or on uh secured or unsecured debt, you wanna make sure that you hold on to that.

If you have high interest rate debt on that, you wanna start thinking about, when is the, when is the time to pull the trigger?

When do you actually need to do that?

And you are able to actually do that, Leslie Tane who's detained law group founder and head lawyer.

Thanks so much for taking the time with us today.


Thank you for having me.


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