Yesterday, the Federal Reserve announced it would leave its benchmark interest rate close to zero. “We’re not even thinking about thinking about thinking about raising rates,” Fed Chair Jerome Powell said in a press conference. As coronavirus cases continue to spike, the Fed also plans to extend its lending programs through the end of the year—but predicts a long road to economic recovery.
While the latest move may make it cheaper to borrow money—some banks have already tightened lending standards across products like mortgages, refinancing, and business loans to protect themselves from future economic downturns.
If you’re carrying a balance on your credit card, you may not see a dip in your interest rate. As CNBC reports, credit card rates have already dropped to 16.04%—a four-year interest rate low, according to Bankrate.
“With all of the economic upheaval in the country right now, and especially the continued high unemployment levels, banks don’t have a good handle on who is a safe borrower and who is a risky borrower,” said Matt Schulz, Credit Industry Expert at CompareCards. Unfortunately, some banks also slashed credit card limits or closed accounts. Schulz said many credit issuers have also slowed down lending in response to the pandemic.
For those ready to finance a car, you may still qualify for low interest rates—assuming you’re among the most creditworthy borrowers. Although Edmunds reported a slight rate increase this month, the company says rates are still at record lows—and 19.4% of new auto purchases have qualified for 0% finance offers.
Student loans are another area where folks may pay less to borrow money. Federal student loan rates for the 2020-2021 school year have also reached record lows. You may also pay less for variable private student loans, depending on the lender and term.
Savers may benefit the least from the Fed’s latest announcement. With the average savings account paying only .06%, it may be difficult to find banks offering competitive interest rates. You may find the best offers through online-only banks. “The average online savings account rate of 1.04% remains well above the target federal funds rate,” said Ken Tumin, founder and editor of DepositAccounts.