A Penny Saved

The Fed, for short, dropped the federal fund rate today as expected. The surprise is that they dropped the rate by .5% rather than the expected .25%. What in the world does that mean to you? Maybe nothing, but maybe a lot.Any sort of variable interest rate is based on the federal govermnent’s short-term interest rates. So those of you with variable-APR credit card debt will see a slight reduction in your rate. More importantly, if you’re unlucky enough to be the owner of an Adjustable Rate Mortgage ( ARM ), you could be affected as well, when your rate resets.

All in all, I think the Fed made a good call. Many folks in our country are either dangerously in debt, or fearful of making large purchases. Lower rates help those currently in debt, and make large purchases somewhat less risky. Times are good.