For the first time since the 2008 financial crisis, the Federal Reserve cut its benchmark borrowing rate by half a percentage point Tuesday.
Experts say the move could mean big savings for those looking to get a new car loan or simply wanting to get their finances in order.
“It’s good news if you have credit card debt because it means, over time, you’ll pay less in interest,” said Kimberly Palmer, a personal finance expert at NerdWallet.
That could be a good opportunity for consumers to get out of debt.
“Credit card interest is typically very high and any drop just makes it easier to manage and pay off that debt,” Kimberly said.
Kimberly told NBC 6 consumers should see their credit card interest rates drop in the next month or so. If you have a mortgage, you could also see some savings if you refinance.
“We’re already seeing a lot of people rush to refinance,” Kimberly said.
But Kimberly said refinancing isn’t for everyone. Refinancing comes with some upfront costs, likely in the thousands of dollars, so consumers will want to do the math first to make sure it makes sense for them financially.
“If the cost of the refinance [is such that] you’ll recoup those within a year or two and you’re planning on staying at your home at least that long, then yes, it absolutely can be a great idea to refinance,” Kimberly said. “Where you want to be careful is if you plan to move within the next few years and you wouldn’t enjoy the benefits of those savings for too long or if the interest rate isn’t that different from your current interest rate on your mortgage.”
There are refinancing calculators available online so consumers can see if refinancing is a good option for them. You can check out one of them, offered by NerdWallet.