NORFOLK, Va. — Now that the Federal Reserve cut interest rates by a quarter-point for the first time in a decade, 13News Now wanted to find out how this impacts every day Americans.
Let’s start with credit card debt: if someone has to pay off $10,000, their minimum payment will decline $2 a month.
Mortgage rates: They are based on long term rates and move in advance, not in response to what the Federal Reserve does. Compared to November rates which were 5.1 percent, they’ve fallen to 3.97 percent.
Car loans: New borrowers for a $25,000 car will save about $3 a month. Existing loans are unaffected.
High-interest savings account on a $10,000 balance: Americans will have about $2 less in interest per month.
Fed Chairman Jerome Powell said they decided to cut interest rates to ensure the U.S. from uncertainty.
“Our manufacturing sector is starting to see a slowdown in their business in Europe and China,” said Tidewater Community College Business Professor Peter Shaw. “So they’re a little bit nervous about that sector.”
Shaw said the interest rate cut will benefit big borrowers and businesses.
“Let’s say you got to borrow $20 million to build a shopping center, a building or develop a residential neighborhood,” explained Shaw. “A quarter-point cut in the first year alone of their debt would be $50,000 so that’s noticeable savings.”
Analysts expect the feds to have another rate cut in the fourth quarter only if global economic growth continues to slow.