How Fed's Rate Cut Affects You - KFDA - NewsChannel 10 / Amarillo News, Weather, Sports

How Fed's Rate Cut Affects You

David Norris, Happy State Bank David Norris, Happy State Bank
Bill Ware, Amarillo National Bank Bill Ware, Amarillo National Bank

In another desperate attempt to stabilize the troubled American economy, the Federal Reserve slashed an interest rate today.

The last time the Fed cut the Federal Funds rate was right after September 11 and it stayed there at one percent until 2004.

Now, once again at one percent, the effect is both positive and negative.

The Federal Funds rate is the rate at which banks charge each other to borrow. For those of you with savings accounts, this is not good news.

David Norris from Happy State Bank says, "this isn't necessarily good for the person who owns their home or car and stays in savings and certificates of deposit. It lowers the return on them."

But for those of you looking to to get a loan, your lending rate will be lower. Bill Ware of Amarillo National Bank says, "effective this afternoon, we've lowered rates 1/2 a point on probably a billion dollars' worth of loans."

Both men say the rate cut will ultimately affect car loans and mortgage loans.  And although the cut will eventually affect those loans, but we are told it still is not a good time to re-finance.

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