{"id":122975,"date":"2021-04-28T19:00:56","date_gmt":"2021-04-28T19:00:56","guid":{"rendered":"https:\/\/precoinnews.com\/?p=122975"},"modified":"2021-04-28T19:00:56","modified_gmt":"2021-04-28T19:00:56","slug":"the-fed-keeps-rates-near-zero-heres-how-you-can-benefit","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/business\/the-fed-keeps-rates-near-zero-heres-how-you-can-benefit\/","title":{"rendered":"The Fed keeps rates near zero \u2014 here\u2019s how you can benefit"},"content":{"rendered":"<ul>\n<li>The Federal Reserve on Wednesday said it would keep its benchmark interest rate near zero.<\/li>\n<li>There are a few ways consumers can still take advantage of the low-interest rate environment while it lasts.<\/li>\n<\/ul>\n<p>The Federal Reserve said Wednesday it will keep its benchmark interest rate near zero to continue to support the economic recovery from the coronavirus pandemic.<\/p>\n<p>It&#x27;s been over a year since the central bank\u00a0slashed its benchmark overnight lending rate. The Fed also instituted\u00a0a series of programs\u00a0to keep credit flowing when the pandemic shut down the economy.<\/p>\n<p>Now the economy\u00a0is gaining steam,\u00a0bolstered by fiscal and economic policy, as well as the\u00a0growing numbers of people vaccinated\u00a0against Covid-19.\u00a0<\/p>\n<p>But with millions of\u00a0people still out of work\u00a0and cash-strapped, the Fed said it is sticking with its policies for now.<\/p>\n<p>&quot;Economic growth is kicking into higher gear, but with 6% unemployment, an uneven household recovery and more than 2 million fewer Americans in the labor force than prior to the outbreak, the Fed is keeping the throttle wide open,&quot; said Greg McBride, chief financial analyst at Bankrate.com.<\/p>\n<p><strong>More from Personal Finance:<\/strong><br \/>Worried about inflation? This investment may be for you<br \/>Many households may pay zero in income taxes this year<br \/>Those $1,400 stimulus checks are still arriving by mail<\/p>\n<p>Although the\u00a0federal funds rate,\u00a0which is what banks charge one another for short-term borrowing, is not the rate that consumers pay, the Fed&#x27;s moves still affect the borrowing and saving rates they see every day.<\/p>\n<p>The Fed&#x27;s historically low borrowing rates has made it easier to borrow money \u2014 while also making it less desirable to hoard cash.<\/p>\n<p>Here&#x27;s how consumers can take advantage of the Fed&#x27;s near-zero rate policy while it lasts.<\/p>\n<h2>Refinance a mortgage<\/h2>\n<p>The economy,\u00a0the Fed\u00a0and inflation all have some influence over long-term fixed\u00a0mortgage rates, which generally are pegged to yields on U.S. Treasury notes.<\/p>\n<p>Currently, the average 30-year fixed-rate home mortgage is 3.21%, up slightly from its record low, according to Bankrate.\u00a0<\/p>\n<p>&quot;The Fed drove\u00a0mortgage rates\u00a0lower in 2020,&quot; said Tendayi Kapfidze, chief economist at LendingTree, an online loan marketplace. Although rates are now rising, they are still low enough to support the housing market, he added.<\/p>\n<p>&quot;if you haven&#x27;t yet refinanced, there is still time to do so,&quot; McBride said.<\/p>\n<p>Consumers can save themselves money if they refinance existing debt for a lower rate. In fact, this may be the best way to free up cash, McBride said.<\/p>\n<h2>Pay down debt<\/h2>\n<p>Most\u00a0credit cards\u00a0come with a variable rate, which means there&#x27;s a direct connection to the Fed&#x27;s benchmark rate.<\/p>\n<p>Since the central bank moved its benchmark rate to near zero in last year, credit card rates have hit a low of just under 16%, on average, according to Bankrate.com.<\/p>\n<p>Still, other short-term borrowing rates are now even lower. &quot;Consider switching to a lower-cost loan, such as using a\u00a0personal loan\u00a0to consolidate and pay off high-interest credit cards,&quot; Kapfidze advised.<\/p>\n<p>&quot;You may significantly lower your overall debt costs.&quot;<\/p>\n<p>For those struggling with college debt, this is a great time to stay up-to-date on payments even though the CARES Act paused federal student loan repayment through September, McBride said.<\/p>\n<p>While interest is suspended, &quot;every dollar will go toward reducing the balance.&quot;<\/p>\n<h2>Boost emergency savings<\/h2>\n<p>To be sure, low interest rates aren&#x27;t good for everyone, particularly savers. However, the government&#x27;s Covid relief payments provide a rare chance to shore up your financial standing.<\/p>\n<p>&quot;Between stimulus payments and tax refunds, it&#x27;s a great opportunity to make some significant headway on your emergency cushion,&quot; McBride said.<\/p>\n<p><svg width=\"20\" height=\"20\" viewBox=\"0 0 20 20\" fill=\"#002F6C\" aria-labelledby=\"title desc\" role=\"img\" focusable=\"false\" data-analytic-id=\"expand-icon\" class=\"InlineImage-background\"><title>Zoom In Icon<\/title><desc>Arrows pointing outwards<\/desc><circle cx=\"10\" cy=\"10\" r=\"10\" fill=\"white\" stroke=\"#002F6C\"><\/circle><\/path><\/svg><\/p>\n<p>&quot;One of the best things Americans can do right now is build up their savings while trimming their debt,&quot; said Matt Schulz, chief credit analyst for LendingTree.<\/p>\n<p>&quot;That savings is the best way to ensure that you don&#x27;t just get right back into the cycle of debt after paying off your credit card.&quot;<\/p>\n<p>Although the Fed has no\u00a0direct influence\u00a0on deposit rates, those tend to be correlated to changes in the target federal funds rate, and, as a result, savers are earning next to nothing on their cash.<\/p>\n<p>The average savings account rate is a mere 0.06%, or even less, at some of the largest retail banks, according to the Federal Deposit Insurance Corp.<\/p>\n<p>But thanks, in part, to lower overhead expenses, the average online savings account rate is at least three times higher than the average rate from a traditional, brick-and-mortar bank.<\/p>\n<p>&quot;Online savings accounts still remain a solid option for short-term savings and emergency funds,&quot; said Ken Tumin, founder of DepositAccounts.com.<\/p>\n<p>In fact, the pandemic has even given digital banks a boost, resulting in more competition to offer better rates.<\/p>\n<p><em><strong>Subscribe to CNBC on YouTube.<\/strong><\/em><\/p>\n<p>Source: <a href=\"https:\/\/www.cnbc.com\/2021\/04\/28\/the-fed-keeps-rates-near-zero-heres-how-you-can-benefit.html\" target=\"_blank\" rel=\"noopener\">Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The Federal Reserve on Wednesday said it<\/p>\n","protected":false},"author":3,"featured_media":122974,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23051],"tags":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v21.7 - 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