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Tag: Interest rate

  • HELOC and home equity loan rates today, January 23, 2026: Clinging to multi-year lows

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    The national average rate for second mortgage products, such as home equity loans and lines of credit, continues to hold close to multi-year lows. The prime rate, a benchmark for home equity lending, isn’t expected to move lower anytime soon, as the Federal Reserve ponders its next interest rate move.

    According to Curinos data, the average HELOC rate is 7.25%, down 19 basis points from last month. The national average rate on a home equity loan is 7.56%, three basis points lower than one month ago.

    Both rates are based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio (CLTV) of less than 70%.

    Homeowners have an impressive amount of value tied up in their houses — nearly $34 trillion at the end of the third quarter of 2025, according to the Federal Reserve.

    With mortgage rates remaining in the low-6% range, homeowners are unlikely to let go of their primary mortgage anytime soon, so selling a house may not be an option. A cash-out refinance might not be workable either. Why give up your 5%, 4% — or even 3% mortgage?

    Accessing some of that value with a use-it-as-you-need-it HELOC or lump-sum home equity loan can be an excellent alternative.

    Home equity interest rates are calculated differently from mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which is 6.75% following the last Federal Reserve rate cut on December 10. If a lender added 0.75% as a margin, the HELOC would have a variable rate of 7.50%.

    A home equity loan may have a different margin, because it is a fixed-interest product.

    Lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home. Shop a few lenders to find your best interest rate offer.

    With three rate cuts from the Federal Reserve in 2025, the prime rate has fallen to 6.75%. As a result, home equity lenders have been repricing their products.

    Today, FourLeaf Credit Union is offering a HELOC APR (annual percentage rate) of 5.99% for 12 months on lines up to $500,000. That’s an introductory rate that will convert to a variable rate at a later date.

    As the offer proves, lenders will not only lower their adjustable rates, but their introductory rates too, following the Fed’s lower-rate policy.

    When shopping for lenders, be aware of both rates. And as always, compare fees, repayment terms, and the minimum draw amount. The draw is the amount of money a lender requires you to initially take from your equity.

    The best home equity loan lenders may be easier to find, because the fixed rate you earn will last the length of the repayment period. That means just one rate to focus on. And you’re getting a lump sum, so no draw minimums to consider.

    Rates vary significantly from one lender to the next. You may see rates from 6% to as much as 18%. It really depends on your creditworthiness and how diligent you are as a shopper. Currently, the national average for a HELOC is 7.25%, and for a home equity loan it’s 7.56%.

    Interest rates fell for most of 2025. They will likely keep dipping lower this year. So yes, it’s a good time to get a second mortgage. And with a HELOC or a HEL, you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Or just about anything else.

    If you withdraw the full $50,000 from a line of credit on your home and pay a 7.50% interest rate, your monthly payment during the 10-year draw period would be about $313. That sounds good, but remember that the rate is usually variable, so it changes periodically, and your payments will increase during the 20-year repayment period. A HELOC essentially becomes a 30-year loan. HELOCs are best if you borrow and repay the balance within a much shorter period of time.

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  • Despite Fed rate cuts, mortgage rates could still rise. Here’s why

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    Mortgage rates are the interest you pay to borrow money for *** home. Higher rates mean higher monthly payments because of accrued interest, which costs you more over the life of *** loan. The Federal Reserve set short-term interest rates, which influence how much you owe for things like credit cards and car loans. But according to experts, mortgage rates do not follow the Fed. Instead they follow the 10-year Treasury, which has to do with US government bonds. Right now, the bond market is nervous about inflation. So even with the Fed’s recent Rate cut in December, mortgage rates didn’t budge. Our get the Facts data team dug into the numbers to show us how mortgages have changed over the last decade. Rates remain high, hovering an average of 6% this year, the lowest rates have been in the last decade and came during the COVID pandemic when they bottomed out at 2.65% in January of 2021. But mortgage rates have hovered around 3 to 4% until the start of 2022 when they surpassed 5% and haven’t dropped. Below 6% since September 2022, and these high rates can be painful when buying *** home. Our get the facts data team found the most expensive mortgages were in places like Santa Clara, San Mateo, and Marin Counties, all in California. But Nantucket County in Massachusetts tops the list, with mortgages averaging nearly $10,000 in 2025. The least expensive are mostly in the South or Midwest, like Todd County, South Dakota or Stewart County, Georgia. Where an average mortgage is over $300. If you’re trying to buy *** home, experts tell our data team there are 3 barriers right now, those high mortgage rates, high home prices, and buyers just not wanting to buy *** house right now due to other levels of uncertainty. If you’re curious with how your monthly mortgage rate has changed, our get the Facts data team created *** tool on our website. You just plug in your county, and it calculates how much more or less you’re paying compared to 10 years ago. Reporting in Washington, I’m Amy Lou.

    Despite Fed rate cuts, mortgage rates could still rise. Here’s why

    The Federal Reserve cut interest rates by 25 basis points at its final meeting of 2025, but the 30-year fixed-rate mortgage remained high at 6.22%.

    Updated: 5:28 AM PST Dec 31, 2025

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    The Federal Reserve cut interest rates by 25 basis points at its final meeting of 2025, but an expert says it may not translate into lower mortgage rates. Susan Wachter, a professor of real estate at the Wharton School at the University of Pennsylvania, said mortgage rates take their metric cue from the 10-year Treasury.”The two rates are disconnected. The only time the two rates move together is if we’re moving towards a recession,” Wachter said. Mortgage rates are the interest you pay to borrow money to buy a home. Higher mortgage rates raise monthly payments because more interest accrues on the principal mortgage each month.The 30-year fixed-rate mortgage averaged 6.22% as of Dec. 11, 2025. That is below the year-to-date average of 6.62%, but Wachter said rates remain high.”Just a matter of four years ago, mortgage rates were 3 or 4%, so this has a big impact on the overall economy, and we cannot, unfortunately, rely on the Federal Reserve’s action to solve this affordability problem,” Wachter said. National Association of Realtors data, analyzed by the Get the Facts Data Team, shows that monthly principal and interest mortgage payments in the United States have nearly doubled in the last 10 years.See how much your monthly mortgage has changed with our calculator.On average, the monthly cost of owning a home in counties across the United States was $1,424 in 2025, compared with $712 in 2015. That number doesn’t include costs like property taxes, homeowner’s insurance, homeowners association fees and other fees. Nantucket County in Massachusetts saw the monthly cost of owning a home more than double, reaching $9,797 in 2025 compared to $4,691 in 2015. The island, located about 30 miles south of Cape Cod, has a median home listing price of $5.2 million, according to Realtor.com.In California, mortgage rates rose by an average of 89% over the last 10 years. The highest mortgage rates in the state are found in Marin, San Mateo and Santa Clara counties.What is driving up mortgage costs?According to Wachter, homebuyers face three barriers: high mortgage rates, high housing prices and a buyer strike.High mortgage rates stem in part from large U.S. budget deficits caused by government borrowing during and after the COVID-19 pandemic. As a result, housing prices have risen and many buyers have pulled back. “Buyers are uncertain about their future job prospects, overall economy prospects — even stock market prospects. That uncertainty is keeping buyers on the sidelines, which is why housing prices, even though they’re near all-time highs, are not increasing anymore,” said Wachter.Aside from increasing mortgage costs, the housing market is also seeing a surge in delistings.”The homeowners who are selling are disappointed because their prices are falling, so they’re taking their homes off the inventory. We see that happening more than ever recently,” Wachter said.A recent report from Realtor.com shows that about 6% of listings have been removed from the market by sellers each month since June. That is the highest national delisting rate reported by Realtor.com since it began tracking this metric in 2022. PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiPiFmdW5jdGlvbigpeyJ1c2Ugc3RyaWN0Ijt3aW5kb3cuYWRkRXZlbnRMaXN0ZW5lcigibWVzc2FnZSIsKGZ1bmN0aW9uKGUpe2lmKHZvaWQgMCE9PWUuZGF0YVsiZGF0YXdyYXBwZXItaGVpZ2h0Il0pe3ZhciB0PWRvY3VtZW50LnF1ZXJ5U2VsZWN0b3JBbGwoImlmcmFtZSIpO2Zvcih2YXIgYSBpbiBlLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdKWZvcih2YXIgcj0wO3I8dC5sZW5ndGg7cisrKXtpZih0W3JdLmNvbnRlbnRXaW5kb3c9PT1lLnNvdXJjZSl0W3JdLnN0eWxlLmhlaWdodD1lLmRhdGFbImRhdGF3cmFwcGVyLWhlaWdodCJdW2FdKyJweCJ9fX0pKX0oKTs8L3NjcmlwdD4K

    NEW YORK —

    The Federal Reserve cut interest rates by 25 basis points at its final meeting of 2025, but an expert says it may not translate into lower mortgage rates.

    Susan Wachter, a professor of real estate at the Wharton School at the University of Pennsylvania, said mortgage rates take their metric cue from the 10-year Treasury.

    “The two rates are disconnected. The only time the two rates move together is if we’re moving towards a recession,” Wachter said.

    Mortgage rates are the interest you pay to borrow money to buy a home. Higher mortgage rates raise monthly payments because more interest accrues on the principal mortgage each month.

    The 30-year fixed-rate mortgage averaged 6.22% as of Dec. 11, 2025. That is below the year-to-date average of 6.62%, but Wachter said rates remain high.

    “Just a matter of four years ago, mortgage rates were 3 or 4%, so this has a big impact on the overall economy, and we cannot, unfortunately, rely on the Federal Reserve’s action to solve this affordability problem,” Wachter said.

    National Association of Realtors data, analyzed by the Get the Facts Data Team, shows that monthly principal and interest mortgage payments in the United States have nearly doubled in the last 10 years.

    See how much your monthly mortgage has changed with our calculator.

    On average, the monthly cost of owning a home in counties across the United States was $1,424 in 2025, compared with $712 in 2015. That number doesn’t include costs like property taxes, homeowner’s insurance, homeowners association fees and other fees.

    Nantucket County in Massachusetts saw the monthly cost of owning a home more than double, reaching $9,797 in 2025 compared to $4,691 in 2015. The island, located about 30 miles south of Cape Cod, has a median home listing price of $5.2 million, according to Realtor.com.

    In California, mortgage rates rose by an average of 89% over the last 10 years. The highest mortgage rates in the state are found in Marin, San Mateo and Santa Clara counties.

    What is driving up mortgage costs?

    According to Wachter, homebuyers face three barriers: high mortgage rates, high housing prices and a buyer strike.

    High mortgage rates stem in part from large U.S. budget deficits caused by government borrowing during and after the COVID-19 pandemic. As a result, housing prices have risen and many buyers have pulled back.

    “Buyers are uncertain about their future job prospects, overall economy prospects — even stock market prospects. That uncertainty is keeping buyers on the sidelines, which is why housing prices, even though they’re near all-time highs, are not increasing anymore,” said Wachter.

    Aside from increasing mortgage costs, the housing market is also seeing a surge in delistings.

    “The homeowners who are selling are disappointed because their prices are falling, so they’re taking their homes off the inventory. We see that happening more than ever recently,” Wachter said.

    A recent report from Realtor.com shows that about 6% of listings have been removed from the market by sellers each month since June. That is the highest national delisting rate reported by Realtor.com since it began tracking this metric in 2022.

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  • HELOC rates today, December 28, 2025: The equity-tapping advantage of 2026

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    The national average home equity line of credit interest rate continues to fall. For 2026, the year will begin with the lowest HELOC rates in more than three years. That’s a hugh advantage that homeowners looking to access the value in their homes will have in the new year.

    According to Curinos data, the average monthly HELOC rate is 7.44%. This rate is based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio (CLTV) of 70%.

    With mortgage rates refusing to budge, homeowners with home equity and a favorable primary mortgage rate may feel the frustation of not being able to access that growing value in their home.

    For those who are unwilling to give up their low home loan rate, a home equity line of credit can be a workable solution.

    The Federal Reserve estimates that homeowners have $36 trillion dollars of equity locked within the walls of their homes. A second mortgage HELOC allows U.S. homeowners to tap into the record-setting equity that has accumulated.

    HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which has just fallen to 6.75%. If a lender added 0.75% as a margin, the HELOC would have a rate of 7.50%.

    Lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan, so it pays to shop around. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home.

    And average national HELOC rates can include “introductory” rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a substantially higher rate.

    You don’t have to give up your low-rate mortgage to access the equity in your home. Keep your primary mortgage and consider a second mortgage, such as a home equity line of credit.

    The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat.

    Meanwhile, you’re paying down your low-interest-rate primary mortgage.

    Today, LendingTree is offering a HELOC APR as low as 6.36% on a credit line of $150,000. However, remember that HELOCs typically come with variable interest rates, meaning your rate will fluctuate periodically. Make sure you can afford monthly payments if your rate rises.

    And as always, compare fees, repayment terms, and the minimum draw amount. The draw is the amount of money a lender requires you to initially take from your equity.

    The power of a HELOC is tapping only what you need and leaving some of your line of credit available for future needs. You don’t pay interest on what you don’t borrow.

    Rates vary so much from one lender to the next that it’s hard to pin down a magic number. You may see rates from just below 6% to as much as 18%. It really depends on your creditworthiness and how diligent a shopper you are.

    For homeowners with low primary mortgage rates and a chunk of equity in their house, it’s probably one of the best times to get a HELOC. You don’t give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can use a HELOC for fun things too, like a vacation — if you have the discipline to pay it off promptly. A vacation is likely not worth taking on long-term debt.

    If you withdraw the full $50,000 from a line of credit on your home and pay a 7.50% interest rate, your monthly payment during the 10-year draw period would be about $313. That sounds good, but remember that the rate is usually variable, so it changes periodically, and your payments will increase during the 20-year repayment period. A HELOC essentially becomes a 30-year loan. HELOCs are best if you borrow and repay the balance within a much shorter period.

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  • HELOC rates today, December 21, 2025: A holiday cash flow solution gets a rate break

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    As the national average home equity line of credit interest rate continues to fall, homeowners are finding a HELOC to be a welcome holiday cash flow solution. With pricing as low as it’s been in three years, based on the prime rate, a HELOC is more affordable these days too.

    According to Curinos data, the average weekly HELOC rate is 7.44%. This rate is based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio (CLTV) of 70%.

    Homeowners had nearly $36 trillion of value in their homes at the end of the second quarter of 2025, according to the Federal Reserve. That’s the largest amount of home equity on record.

    With mortgage rates still lingering above 6%, homeowners are not likely to let go of their primary mortgage anytime soon, so selling a house or getting a cash-out refinance may not be an option. Why give up your 5%, 4% — or even 3% mortgage?

    Accessing some of that value with a use-it-as-you-need-it HELOC can be an excellent alternative.

    HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which has just fallen to 6.75%. If a lender added 0.75% as a margin, the HELOC would have a rate of 7.50%.

    Lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan, so it pays to shop around. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home.

    And average national HELOC rates can include “introductory” rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a substantially higher rate.

    You don’t have to give up your low-rate mortgage to access the equity in your home. Keep your primary mortgage and consider a second mortgage, such as a home equity line of credit.

    The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat.

    Meanwhile, you’re paying down your low-interest-rate primary mortgage.

    Today, LendingTree is offering a HELOC APR as low as 6.36% on a credit line of $150,000. However, remember that HELOCs typically come with variable interest rates, meaning your rate will fluctuate periodically. Make sure you can afford monthly payments if your rate rises.

    And as always, compare fees, repayment terms, and the minimum draw amount. The draw is the amount of money a lender requires you to initially take from your equity.

    The power of a HELOC is tapping only what you need and leaving some of your line of credit available for future needs. You don’t pay interest on what you don’t borrow.

    Rates vary so much from one lender to the next that it’s hard to pin down a magic number. You may see rates from just below 6% to as much as 18%. It really depends on your creditworthiness and how diligent a shopper you are.

    For homeowners with low primary mortgage rates and a chunk of equity in their house, it’s probably one of the best times to get a HELOC. You don’t give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can use a HELOC for fun things too, like a vacation — if you have the discipline to pay it off promptly. A vacation is likely not worth taking on long-term debt.

    If you withdraw the full $50,000 from a line of credit on your home and pay a 7.50% interest rate, your monthly payment during the 10-year draw period would be about $313. That sounds good, but remember that the rate is usually variable, so it changes periodically, and your payments will increase during the 20-year repayment period. A HELOC essentially becomes a 30-year loan. HELOCs are best if you borrow and repay the balance within a much shorter period.

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  • Video: Trump Attacks Fed Governors Ahead of Key Interest Rate Meeting

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    Trump Attacks Fed Governors Ahead of Key Interest Rate Meeting

    During a speech in Pennsylvania focused on the economy, President Trump criticized the Fed chair, Jerome Powell, and four other members. The attack came as the Fed prepares to reveal new interest rates.

    “We have a bad head of the Fed. You know who ‘too late’ is? ‘Too late’ Powell? Jerome ‘too late’ — he’s too late with his interest rates for a reason. He’s a bad guy. He’s not a smart guy, but he’s a bad guy. Well, this is a nice crowd.” “I think the risk of of higher, more persistent inflation has declined.” “I just heard it could be that all four commissioners in the Fed signed by Biden — I hear that the autopen… … They put people there that are not authorized to be there.”

    During a speech in Pennsylvania focused on the economy, President Trump criticized the Fed chair, Jerome Powell, and four other members. The attack came as the Fed prepares to reveal new interest rates.

    By Shawn Paik

    December 10, 2025

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    Shawn Paik

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  • HELOC rates today, November 23, 2025: Lowest 2025 rates in time for holiday cash needs

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    Nationally, the average home equity line of credit interest rate remains under 8%, according to the analytics company Curinos. With the holidays looming, a HELOC can be an excellent source of cash when you need it most.

    According to Curinos data, the average weekly HELOC rate is 7.64%, its lowest point so far in 2025. This rate is based on applicants with a minimum credit score of 780 and a maximum combined loan-to-value ratio (CLTV) of 70%.

    Homeowners have a huge amount of value tied up in their houses — nearly $36 trillion at the end of the quarter of 2025, according to the Federal Reserve. That’s the largest amount of home equity on record.

    With mortgage rates lingering above 6%, homeowners are not likely to let go of their primary mortgage anytime soon, so selling a house or getting a cash-out refinance may not be an option. Why give up your 5%, 4% — or even 3% mortgage?

    Accessing some of that value with a use-it-as-you-need-it HELOC can be an excellent alternative.

    HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which has fallen recently to 7.00%. If a lender added 0.75% as a margin, the HELOC would have a rate of 7.75%.

    Lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan, so it pays to shop around. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home.

    And average national HELOC rates can include “introductory” rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a substantially higher rate.

    You don’t have to give up your low-rate mortgage to access the equity in your home. Keep your primary mortgage and consider a second mortgage, such as a home equity line of credit.

    The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat.

    Meanwhile, you’re paying down your low-interest-rate primary mortgage like the wealth-building machine you are.

    Today, LendingTree is offering a HELOC APR as low as 6.38% on a credit line of up to $150,000. However, remember that HELOCs typically come with variable interest rates, meaning your rate will fluctuate periodically. Make sure you can afford monthly payments if your rate rises.

    And as always, compare fees, repayment terms, and the minimum draw amount. The draw is the amount of money a lender requires you to initially take from your equity.

    The power of a HELOC is tapping only what you need and leaving some of your line of credit available for future needs. You don’t pay interest on what you don’t borrow.

    Rates vary so much from one lender to the next that it’s hard to pin down a magic number. You may see rates from just below 6% to as much as 18%. It really depends on your creditworthiness and how diligent a shopper you are.

    For homeowners with low primary mortgage rates and a chunk of equity in their house, it’s probably one of the best times to get a HELOC. You don’t give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can use a HELOC for fun things too, like a vacation — if you have the discipline to pay it off promptly. A vacation is likely not worth taking on long-term debt.

    If you withdraw the full $50,000 from a line of credit on your home and pay a 7.50% interest rate, your monthly payment during the 10-year draw period would be about $313. That sounds good, but remember that the rate is usually variable, so it changes periodically, and your payments will increase during the 20-year repayment period. A HELOC essentially becomes a 30-year loan. HELOCs are best if you borrow and repay the balance within a much shorter period.

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  • How smart borrowing can grow your wealth

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    Taking on debt isn’t always a bad thing. In fact, some strategic borrowing could help you build wealth, as long as you have a clear purpose for the funds.

    When used wisely, debt such as a personal loan can be an effective tool for growing your income, improving your credit, consolidating debt, or increasing the value of your home. Using a personal loan for a vacation or other discretionary expense, however, won’t improve your long-term financial picture.

    Knowing how to use a personal loan strategically can help you achieve your financial goals while avoiding the pitfalls of burdensome debt.

    Taking on debt to make more money may seem counterintuitive, but personal loans can be useful tools for building financial security. The key is to use the loan for a specific goal that offers a return on investment (ROI), such as consolidating high-interest debt or increasing your home’s value with renovations. Here’s a closer look at some of the ways a personal loan could improve your financial stability.

    Using a personal loan to consolidate high-interest debt could save you money on interest and get you out of debt faster.

    • Lower your interest rate: Personal loan rates are typically lower than credit card rates. According to the Federal Reserve, the average interest rate on a two-year personal loan is 11.14%, while the average rate on a credit card is nearly double that at 21.39%. Reducing your rate can save you money and potentially help you pay the debt off faster.

    • Simplify repayment: After consolidating, you’ll have just one monthly payment to manage, rather than juggling multiple due dates and payments. Personal loans typically have fixed rates and repayment terms, so your monthly payments are predictable and won’t fluctuate over time.

    • Reduce your credit utilization: If you use a personal loan to consolidate credit card debt, you’ll reduce your credit utilization, which could boost your credit score. This can make it easier to qualify for good rates and terms on a loan in the future.

    • Remove the temptation to keep borrowing: A personal loan offers a lump sum up front. Since it’s not a revolving line of credit, you won’t be able to continually borrow against it and incur additional debt.

    If debt consolidation helps you pay off your debt faster, you’ll have more money to save for retirement, funnel into investments, or put toward another long-term goal.

    Paying for home improvements is another common use for a personal loan. Refurbishing your home can increase its value, potentially leading to a higher sale price or rental income. It can also increase your equity, which could make it easier to borrow a home equity loan or HELOC in the future.

    You can put a personal loan toward a variety of projects, such as replacing an old roof or adding energy-efficient upgrades that reduce your utility costs. Renovations that can add the most value to your home include renovating a kitchen, remodeling bathrooms, and sprucing up the curb appeal.

    You may also use a personal loan to cover the costs of job training, such as one-on-one coaching or a certification program. Gaining new skills can lead to a higher income if it helps you secure a promotion, land a new job, or attract new clients.

    Developing your expertise through professional training or business coaching can offer a high return on investment over time. This ROI may outweigh the interest you pay on a personal loan. Keep in mind, however, that most lenders don’t let you use personal loan funds for college tuition.

    If the lender allows it, you might also use a personal loan to start or expand your business or side hustle. You could use the funds to pay for startup expenses, create new products, or grow your team.

    Leveraging a personal loan in this way could grow your wealth if it helps your business succeed. Keep in mind that not all lenders let you use personal loans for business expenses. You should consider small business loans to determine which type of loan better suits your needs.

    Read more: Can I use a personal loan for anything? 6 expenses that are restricted.

    Taking on a personal loan isn’t always a recipe for wealth creation. There are situations where borrowing could hurt your financial situation more than it helps, such as:

    • Using the loan on nonessential expenses: Taking out a personal loan to pay for discretionary expenses, such as a vacation or wedding, can be costly and is unlikely to offer a financial ROI.

    • Borrowing without a clear plan for repayment: Before agreeing to a loan, review the terms, interest rate, and monthly payment to understand your financial obligations and have a solid plan for covering them.

    • Taking on more debt than you can afford: If your budget is already tight, taking out a loan could create financial strain. Failing to make payments on time can result in late fees and a negative impact on your credit score.

    • Consolidating debt without changing your spending habits: Using a personal loan for debt consolidation would only be a temporary solution if you continue to accumulate high-interest credit card debt.

    • Spending the funds on a depreciating asset: If you’re purchasing an item that loses value quickly, like a boat, electronics, or luxury goods, you could end up paying more in interest than the item is worth.

    Read more: Good debt vs. bad debt: A guide to borrowing wisely

    If you’re considering a personal loan to grow wealth, ask yourself how the loan will improve your financial situation over time. Will it help you grow your income or increase the value of your home? If you’re using it for debt consolidation, will you save money on interest or pay the debt off faster? Ensure the loan aligns with your long-term goals and doesn’t add unnecessary risk.

    Check that you can comfortably afford the monthly payments without draining your emergency savings. Consider how borrowing will impact your debt-to-income (DTI) ratio too, which compares your monthly debt payments with your gross income. Most lenders prefer a DTI below 35% when considering you for a new loan or line of credit.

    Finally, take the time to shop around with multiple lenders before picking a loan. You can often check your rates and prequalify online, a quick process that won’t affect your credit score. By doing your due diligence, you can find your best offer and use the loan to achieve your wealth-building goals.

    This article was edited by Alicia Hahn.

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  • Video: Fed Cuts Interest Rates for Second Time This Year

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    Fed Cuts Interest Rates for Second Time This Year

    Fed Chair Jerome Powell announced that the Federal Reserve would cut interest rates by another quarter point on Wednesday, the second cut this year. Interest rates set by the Fed are now below 4 percent for the first time since late 2022. Mr. Powell noted that officials were divided on the cut, and said that another cut at the December meeting was not a “foregone conclusion.”

    My colleagues and I remain squarely focused on achieving our dual mandate goals of maximum employment and stable prices for the benefit of the American people. Although some important federal government data have been delayed due to the shutdown, the public and private sector data that have remained available suggests that the outlook for employment and inflation has not changed much since our meeting in September. You can argue these positions since it can’t be directly observed. Division, then, you’re talking about going forward. In the near term, risks to inflation are tilted to the upside and risks to employment to the downside. A challenging situation. There is no risk-free path for policy as we navigate this tension between our employment and inflation goals. Our framework calls for us to take a balanced approach in promoting both sides of our dual mandate.

    Fed Chair Jerome Powell announced that the Federal Reserve would cut interest rates by another quarter point on Wednesday, the second cut this year. Interest rates set by the Fed are now below 4 percent for the first time since late 2022. Mr. Powell noted that officials were divided on the cut, and said that another cut at the December meeting was not a “foregone conclusion.”

    By Jamie Leventhal

    October 29, 2025

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    Jamie Leventhal

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  • ‘Everyone is doing well’: President Trump praises economy amid layoffs, potential SNAP crisis

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    ‘Everyone is doing well’: President Trump praises economy amid layoffs, potential SNAP crisis

    President Trump promotes economic prosperity during his visit to Japan, while layoffs and a federal shutdown threaten millions back in the U.S.

    Updated: 3:03 PM PDT Oct 28, 2025

    Editorial Standards ⓘ


    White House Correspondent

    President Donald Trump is promoting Japanese companies investing $550 billion in the United States while visiting the East Asian country. The president said the funds would be “at my direction” as part of a trade framework secured with Japan. The president also boasted about the U.S. economy, despite contrasting economic challenges.”Well, everyone in our country is now doing well. My first term, we built the greatest economy in the history of the world. We had an economy like nobody has seen before now. We’re doing it again, but this time, actually, it’s going to be much bigger, much stronger,” Trump said.The president highlighted the stock market reaching all-time highs, but economists point to other indicators that tell a different story. Amazon announced it is cutting 14,000 jobs, UPS is eliminating roughly 48,000 positions and closing more than 90 buildings as part of a turnaround plan, and Target, Ford, and GM have also announced layoffs amid slowing demand. Additionally, the federal government shutdown threatens food aid benefits for more than 40 million Americans as soon as Nov. 1, and September’s CPI data showed prices are rising again just as the Federal Reserve has cut interest rates to support the economy.”I don’t really understand the optimism to be perfectly honest, and I’m a very optimistic, very little of a ‘doomer’ person. We’ve had seven months in a row of contractions and manufacturing output. The labor market cooled to such an extent that it forced the Fed to cut rates in September,” said Jai Kedia from the Cato Institute.President Trump is preparing to meet with Chinese President Xi Jinping amid the ongoing U.S.–China trade war. Treasury Secretary Scott Bessent said the two countries have reached a “very successful framework” ahead of their summit, covering tariffs, rare-earth exports and large U.S. agricultural purchases.Meanwhile, 26 states and Washington, D.C., are suing the USDA, arguing the agency has contingency funds that could be used to maintain SNAP benefits during the shutdown. In a memo, the USDA stated that those funds can only be used for a natural disaster or other emergency, not to operate during a shutdown, and placed the blame on Senate Democrats, saying, “We are approaching an inflection point for Senate Democrats. Continue to hold out for the Far-Left wing of the party or reopen the government so mothers, babies, and the most vulnerable among us can receive timely WIC and SNAP allotments.” The states argue the law requires the USDA to issue benefits as long as money is available.It comes after another failed vote occurred today in the Senate. A federal judge in San Francisco has issued a preliminary injunction blocking the Trump administration from firing federal workers during the government shutdown. This move comes as a lawsuit challenges recent job cuts in education, health, and other areas.For more coverage from the Washington News Bureau here:

    WASHINGTON —

    President Donald Trump is promoting Japanese companies investing $550 billion in the United States while visiting the East Asian country. The president said the funds would be “at my direction” as part of a trade framework secured with Japan.

    The president also boasted about the U.S. economy, despite contrasting economic challenges.

    “Well, everyone in our country is now doing well. My first term, we built the greatest economy in the history of the world. We had an economy like nobody has seen before now. We’re doing it again, but this time, actually, it’s going to be much bigger, much stronger,” Trump said.

    The president highlighted the stock market reaching all-time highs, but economists point to other indicators that tell a different story.

    Amazon announced it is cutting 14,000 jobs, UPS is eliminating roughly 48,000 positions and closing more than 90 buildings as part of a turnaround plan, and Target, Ford, and GM have also announced layoffs amid slowing demand.

    Additionally, the federal government shutdown threatens food aid benefits for more than 40 million Americans as soon as Nov. 1, and September’s CPI data showed prices are rising again just as the Federal Reserve has cut interest rates to support the economy.

    “I don’t really understand the optimism to be perfectly honest, and I’m a very optimistic, very little of a ‘doomer’ person. We’ve had seven months in a row of contractions and manufacturing output. The labor market cooled to such an extent that it forced the Fed to cut rates in September,” said Jai Kedia from the Cato Institute.

    President Trump is preparing to meet with Chinese President Xi Jinping amid the ongoing U.S.–China trade war. Treasury Secretary Scott Bessent said the two countries have reached a “very successful framework” ahead of their summit, covering tariffs, rare-earth exports and large U.S. agricultural purchases.

    Meanwhile, 26 states and Washington, D.C., are suing the USDA, arguing the agency has contingency funds that could be used to maintain SNAP benefits during the shutdown.

    In a memo, the USDA stated that those funds can only be used for a natural disaster or other emergency, not to operate during a shutdown, and placed the blame on Senate Democrats, saying, “We are approaching an inflection point for Senate Democrats. Continue to hold out for the Far-Left wing of the party or reopen the government so mothers, babies, and the most vulnerable among us can receive timely WIC and SNAP allotments.”

    The states argue the law requires the USDA to issue benefits as long as money is available.

    It comes after another failed vote occurred today in the Senate. A federal judge in San Francisco has issued a preliminary injunction blocking the Trump administration from firing federal workers during the government shutdown. This move comes as a lawsuit challenges recent job cuts in education, health, and other areas.

    For more coverage from the Washington News Bureau here:

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  • Supreme Court puts off decision on whether Trump may fire Federal Reserve Governor Lisa Cook

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    WASHINGTON — The Supreme Court on Wednesday put off a decision on whether President Trump can fire Federal Reserve Govenor Lisa Cook and said it would hear arguments on the case in January.

    The court’s action allows Cook to remain in her position, and it prevents Trump from taking majority control of the historically independent central bank board.

    Last month, the president said he fired Cook “for cause,” citing mortgage documents she signed in 2021 confirming that two different properties were her primary residence.

    But the flap over her mortgages arose as Trump complained that the Federal Reserve Board, including Cook, had not lowered interest rates to his satisfaction.

    “We will have a majority very shortly,” Trump said after he fired Cook.

    In September, Trump appointed Stephen Miran, the chair of of his White House Council of Economic Advisers, to serve a temporary term on the seven-member Federal Reserve Board. He joined two other Trump appointees.

    Congress wrote the Federal Reserve Act of 1913 intending to give the central bank board some independence from politics and the current president.

    Its seven members are appointed by the president and confirmed by the Senate, and they serve staggered terms of 14 years, unless “removed for cause by the president.”

    The law does not define what amounts to cause.

    President Biden appointed Cook to a temporary term in 2022 and to a full term a year later.

    In August, however, Bill Pulte, Trump’s director of the Federal Housing Finance Agency, alleged that Cook committed mortgage fraud when she took out two housing loans in 2021. One was for $203,000 for a house in Ann Arbor, Mich., and the second was for $540,000 for a condo in Atlanta. In both instances, he said she signed a loan document saying the property would be her primary residence.

    Mortgage lenders usually offer a lower interest rate for a borrower’s primary residence.

    Cook has not directly refuted the allegation about her mortgage documents, but her attorneys said she told the lender she was seeking the Atlanta condo as a vacation home.

    Trump, however, sent Cook a letter on Aug. 25. “You may be removed, at my discretion, for cause,” citing the law and Pulte’s referral. “I have determined that there is sufficient cause to remove you from your position,” he wrote.

    Cook refused to step down and filed a suit to challenge the decision. She argued the allegation did not amount to cause under the law, and she had not been given a hearing to contest it.

    A federal judge in Washington agreed and blocked her firing, noting that unproven allegation of mortgage fraud occurred before she was appointed to the Federal Reserve.

    By a 2-1 vote, the appeals court also refused to uphold her firing.

    Trump’s lawyers sent an emergency appeal to the Supreme Court on Sept. 18 arguing Congress gave the president the authority to fire a Fed governor he concludes she is not trustworthy.

    “Put simply, the President may reasonably determine that interest rates paid by the American people should not be set by a Governor who appears to have lied about facts material to the interest rates she secured for herself — and refuses to explain the apparent misrepresentations,” wrote Trump Solicitor Gen. D. John Sauer.

    But the justices refused to act on an emergency appeal and decided they will give the case a full hearing and a written decision.

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  • Federal Reserve to announce interest rate cut amid economic slowdown, pressure from President Trump

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    Federal Reserve to announce interest rate cut amid economic slowdown, pressure from President Trump

    The Federal Reserve is set to announce an interest rate cut this week in response to a slowing economy, making clear it is not surrendering to President Donald Trump’s demands.

    Updated: 7:42 AM PDT Sep 14, 2025

    Editorial Standards ⓘ

    The Federal Reserve is expected to announce a long-awaited interest rate cut this week, responding to a slowing economy as opposed to yielding to President Donald Trump’s demands. Recent data shows hiring is slowing and unemployment is ticking up, which would normally call for an interest rate cut. Lower interest rates make borrowing money for things like cars and credit cards cheaper. At the same time, inflation remains stubbornly high, which is usually solved by keeping interest rates where they are and leaving costly prices up.With a big decision facing the Fed, added pressure from President Trump isn’t helping. Experts say his repeated calls for the Fed to lower interest rates are damaging the agency’s independence and credibility, spooking investors and the market. “If the Fed is politicized and they’re acting based upon political pressures rather than accurate economic data, that’s going to send messages throughout the economy that maybe what they’re doing isn’t really good for the economy, and maybe it doesn’t come from a solid place of evidence,” political analyst Todd Belt said. “It will introduce even more uncertainty in the economy, and uncertainty is the enemy of business planning.”President Trump’s tariffs have also injected lots of uncertainty in the market, and economists say that, in turn, will further drive up inflation.In a further escalation involving the president and the Fed, last week, a federal judge blocked Trump’s unprecedented attempt to fire Federal Reserve Governor Lisa Cook, alleging mortgage fraud. Now, the administration is appealing and is pushing the courts for an emergency ruling before the Fed’s big interest rate decision this week. But a big twist could undermine the administration’s case, as the Associated Press reports that Cook previously referred to the property in question as a “vacation home,” which would contradict the White House’s accusations of fraud.Watch the latest on the Federal Reserve:

    WASHINGTON —

    The Federal Reserve is expected to announce a long-awaited interest rate cut this week, responding to a slowing economy as opposed to yielding to President Donald Trump’s demands.

    Recent data shows hiring is slowing and unemployment is ticking up, which would normally call for an interest rate cut. Lower interest rates make borrowing money for things like cars and credit cards cheaper.

    At the same time, inflation remains stubbornly high, which is usually solved by keeping interest rates where they are and leaving costly prices up.

    With a big decision facing the Fed, added pressure from President Trump isn’t helping. Experts say his repeated calls for the Fed to lower interest rates are damaging the agency’s independence and credibility, spooking investors and the market.

    “If the Fed is politicized and they’re acting based upon political pressures rather than accurate economic data, that’s going to send messages throughout the economy that maybe what they’re doing isn’t really good for the economy, and maybe it doesn’t come from a solid place of evidence,” political analyst Todd Belt said. “It will introduce even more uncertainty in the economy, and uncertainty is the enemy of business planning.”

    President Trump’s tariffs have also injected lots of uncertainty in the market, and economists say that, in turn, will further drive up inflation.

    In a further escalation involving the president and the Fed, last week, a federal judge blocked Trump’s unprecedented attempt to fire Federal Reserve Governor Lisa Cook, alleging mortgage fraud.

    Now, the administration is appealing and is pushing the courts for an emergency ruling before the Fed’s big interest rate decision this week. But a big twist could undermine the administration’s case, as the Associated Press reports that Cook previously referred to the property in question as a “vacation home,” which would contradict the White House’s accusations of fraud.

    Watch the latest on the Federal Reserve:

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  • HELOC rates today, September 14, 2025: Don’t wait on the Fed for a lower interest rate

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    The HELOC interest rate today remains under 9%. However, you don’t have to wait for a Fed rate cut to find a lower home equity line of credit interest rate. Shop lenders offering introductory rates. You may find rates as low as 3.99% to 5.99% that will last for six months to one year.

    Dig deeper: Is it a good idea to get a HELOC? Here are the pros and cons.

    According to Bank of America, the largest HELOC lender in the country, today’s average APR on a 10-year draw HELOC remains 8.72%. That is a variable rate that kicks in after a six-month introductory APR of 6.49% in most U.S. states.

    Homeowners have a huge amount of value tied up in their houses — more than $34 trillion at the end of 2024, according to the Federal Reserve. That’s the third-largest amount of home equity on record.

    With mortgage rates lingering above 6%, homeowners are not likely to let go of their primary mortgage anytime soon, so selling a house may not be an option. Why give up your 5%, 4% — or even 3% mortgage?

    Accessing some of that value with a use-it-as-you-need-it HELOC can be an excellent alternative.

    HELOC interest rates are different from primary mortgage rates. Second mortgage rates are based on an index rate plus a margin. That index is often the prime rate, which today is 7.50%. If a lender added 1% as a margin, the HELOC would have a rate of 8.50%.

    Lenders have flexibility with pricing on a second mortgage product, such as a HELOC or home equity loan, so it pays to shop around. Your rate will depend on your credit score, the amount of debt you carry, and the amount of your credit line compared to the value of your home.

    And average national HELOC rates can include “introductory” rates that may only last for six months or one year. After that, your interest rate will become adjustable, likely beginning at a substantially higher rate.

    You don’t have to give up your low-rate mortgage to access the equity in your home. Keep your primary mortgage and consider a second mortgage, such as a home equity line of credit.

    The best HELOC lenders offer low fees, a fixed-rate option, and generous credit lines. A HELOC allows you to easily use your home equity in any way and in any amount you choose, up to your credit line limit. Pull some out; pay it back. Repeat.

    Meanwhile, you’re paying down your low-interest-rate primary mortgage like the wealth-building machine you are.

    Today, LendingTree is offering a HELOC rate as low as 6.75% for a credit line of $150,000. That’s likely an introductory rate that will convert to a variable rate later. When shopping lenders, be aware of both rates. And as always, compare fees, repayment terms, and the minimum draw amount. The draw is the amount of money a lender requires you to initially take from your equity.

    The power of a HELOC is tapping only what you need and leaving some of your line of credit available for future needs. You don’t pay interest on what you don’t borrow.

    Rates vary so much from one lender to the next that it’s hard to pin down a magic number. You may see rates from nearly 7% to as much as 18%. It really depends on your creditworthiness and how diligent a shopper you are.

    For homeowners with low primary mortgage rates and a chunk of equity in their house, it’s probably one of the best times to get a HELOC. You don’t give up that great mortgage rate, and you can use the cash drawn from your equity for things like home improvements, repairs, and upgrades. Of course, you can use a HELOC for fun things too, like a vacation — if you have the discipline to pay it off promptly. A vacation is likely not worth taking on long-term debt.

    If you take out the full $50,000 from a line of credit on a $400,000 home, your payment may be around $395 per month with a variable interest rate beginning at 8.75%. That’s for a HELOC with a 10-year draw period and a 20-year repayment period. That sounds good, but remember, it winds up being a 30-year loan. HELOCs are best if you borrow and pay back the balance in a much shorter period of time.

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  • Best CD rates today, September 13, 2025 (best account provides 4.45% APY)

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    Find out how much you could earn by locking in a high CD rate today. The Federal Reserve cut its federal funds rate three times in 2024, so now could be your last chance to lock in a competitive CD rate before rates fall further. CD rates vary widely across financial institutions, so it’s important to ensure you’re getting the best rate possible when shopping around for a CD.

    The following is a breakdown of CD rates today and where to find the best offers.

    Generally, the best CD rates today are offered on shorter terms of around one year or less. Online banks and credit unions, in particular, offer the top CD rates.

    As of September 13, 2025, the highest CD rate is 4.45% APY. This rate is offered by LendingClub on its 8-month CD.

    Here is a look at some of the best CD rates available today:

    The amount of interest you can earn from a CD depends on the annual percentage rate (APY). This is a measure of your total earnings after one year when considering the base interest rate and how often interest compounds (CD interest typically compounds daily or monthly).

    Say you invest $1,000 in a one-year CD with 1.81% APY, and interest compounds monthly. At the end of that year, your balance would grow to $1,018.25 — your initial $1,000 deposit, plus $18.25 in interest.

    Now let’s say you choose a one-year CD that offers 4% APY instead. In this case, your balance would grow to $1,040.74 over the same period, which includes $40.74 in interest.

    The more you deposit in a CD, the more you stand to earn. If we took our same example of a one-year CD at 4% APY, but deposit $10,000, your total balance when the CD matures would be $10,407.42, meaning you’d earn $407.42 in interest. ​​

    Read more: What is a good CD rate?

    When choosing a CD, the interest rate is usually top of mind. However, the rate isn’t the only factor you should consider. There are several types of CDs that offer different benefits, though you may need to accept a slightly lower interest rate in exchange for more flexibility. Here’s a look at some of the common types of CDs you can consider beyond traditional CDs:

    • Bump-up CD: This type of CD allows you to request a higher interest rate if your bank’s rates go up during the account’s term. However, you’re usually allowed to “bump up” your rate just once.

    • No-penalty CD: Also known as a liquid CD, type of CD gives you the option to withdraw your funds before maturity without paying a penalty.

    • Jumbo CD: These CDs require a higher minimum deposit (usually $100,000 or more), and often offer higher interest rate in return. In today’s CD rate environment, however, the difference between traditional and jumbo CD rates may not be much.

    • Brokered CD: As the name suggests, these CDs are purchased through a brokerage rather than directly from a bank. Brokered CDs can sometimes offer higher rates or more flexible terms, but they also carry more risk and might not be FDIC-insured.

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  • Hong Kong’s dollar-peg defense leaves bittersweet taste for borrowers as Hibor rises

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    A “low-rate honeymoon” for Hong Kong borrowers has come to an end with an increase in the interest rate banks use to set loan prices, a mixed blessing that drives away carry traders but threatens a property market recovery and discourages corporate borrowing, according to analysts.

    The Hong Kong Monetary Authority intervened 12 times in the currency market over the past two months, successfully defending the local currency’s peg to the US dollar by buying HK$119.95 billion and selling US$15.28 billion between June 25 and August 13.

    However, these interventions mopped up excess liquidity in the banking sector, prodding up the Hong Kong interbank offered rate (Hibor), which will put more pressure on borrowers whose loans are based on the rate.

    Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

    “The higher Hibor rate will definitely have a negative impact on the investment market and property trading,” said independent analyst Jasper Lo.

    Hong Kong’s currency has been pegged to the US dollar since 1983 at a fixed exchange rate of HK$7.80 per US dollar. In 2005, the HKMA established a narrow trading band, allowing the Hong Kong dollar to fluctuate between HK$7.75 and HK$7.85. When the local currency’s exchange rate nears either end of that range, the HKMA buys or sells currency to alter the supply-demand equation and reel it back in.

    The HKMA’s 12 recent interventions reduced the aggregate balance, a measure of banking-sector liquidity, by 69 per cent to HK$53.72 billion as of August 14 from a recent peak of HK$174 billion in May.

    As a result, the overnight Hibor hit 2.7678 per cent on Friday, compared with 0.1770 per cent on August 13. The one-month Hibor, which is used to price mortgage loans, rose to 2.7706 per cent from 0.9103 per cent during the same period, while the three-month Hibor used for corporate loans rose to 2.8373 per cent from 1.6063 per cent.

    The immediate impact of the higher Hibor is narrowing the interest-rate gap between the US and Hong Kong to about 1.56 percentage points on Friday, compared with more than 4 percentage points from May to mid-August.

    The Hong Kong Monetary Authority logo is seen in IFC Two in Central. Photo: Jonathan Wong alt=The Hong Kong Monetary Authority logo is seen in IFC Two in Central. Photo: Jonathan Wong>

    The wide gap from May triggered carry trades, where investors borrow in low-interest currencies to invest in higher-yielding assets, which pushed the Hong Kong dollar to the weak end of its peg and triggered the HKMA interventions.

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  • Video: Fed Chair Hints at Interest Rate Cuts, While Emphasizing Caution

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    Fed Chair Hints at Interest Rate Cuts, While Emphasizing Caution

    Jerome H. Powell, the chair of the Federal Reserve, signaled that interest rate cuts may be coming during his final speech as Fed chair on Friday at an annual conference hosted by the Reserve Bank of Kansas City in Jackson, Wyo.

    Labor market remains near maximum employment and inflation, though still somewhat elevated, has come down a great deal from its post-pandemic highs. At the same time, the balance of risks appears to be shifting. Our policy rate is now 100 basis points closer to neutral than it was a year ago, and the stability of the unemployment rate and other labor market measures allows us to proceed carefully as we consider changes to our policy stance.

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  • Why I’m not doing anything to cope with lower interest rates

    Why I’m not doing anything to cope with lower interest rates

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    How should a retail investor deal with Wednesday’s interest rate cut by the Federal Reserve and with the future rate cuts that seem to be on the horizon?

    What I plan to do is nothing. Which may be what you should do too.

    How can I say “do nothing” when the airwaves, print media, and the internet are filled with advice and suggestions — and warnings — about how to handle the Fed’s rate cut?

    Let me show you why my wife and I aren’t planning to do anything about the rate cuts, which will reduce our interest income but not threaten our overall financial well-being. And why you may not want to do anything, either.

    Here’s the deal. The Fed has cut the federal funds rate to between 4.5% and 4.75% from the former 5% to 5.25%. Fed Chairman Jerome Powell has made it clear that the Fed is planning at least one more rate cut this year.

    8/29/24

    The Fed controls only this short-term rate, but lowering it puts downward pressure on longer-term rates as well. That’s great, of course, for many of us, making it easier and cheaper to borrow. But it’s not great for savers. That’s because the income they get on their savings is going to decline.

    Read more: The Fed rate cut: What it means for bank accounts, CDs, loans, and credit cards

    We have significant cash holdings, which we keep in low-cost, high-quality money market funds. Our income from those funds, which has risen nicely over the past few years, is going to decline. But such is life.

    Some people advise you to lock up yields by switching cash into long-term bonds or long-term certificates of deposit, whose interest rates are fixed and won’t fall because of the Fed’s rate cuts.

    However, there’s a problem with doing that.

    Locking up yields by buying long-term bonds or CDs makes your money illiquid. This exposes you to some long-term risks, such as having to sell at a loss if rates rise — which they will sooner or later, trust me —or if you need the cash that you’ve locked up long-term.

    WASHINGTON, DC - MAY 01: Federal Reserve Bank Chair Jerome Powell announces that interest rates will remain unchanged during a news conference at the bank's William McChesney Martin building on May 01, 2024 in Washington, DC. Following the regular two-day Federal Open Markets Committee meeting, Powell said the U.S. economy continues to show momentum and inflation has remained high in recent months, informing the Fed's decision to keep their current 5.33 percent rate setting. (Photo by Chip Somodevilla/Getty Images)

    Money market man? Federal Reserve Bank Chair Jerome Powell (Photo: Chip Somodevilla/Getty Images) (Chip Somodevilla via Getty Images)

    By contrast, if you’ve done what we have done — put our surplus cash into well-regarded, low-cost money market funds — your income will go down when the Fed’s rate cuts work their way through the financial system. But you’ve still got liquidity, the ability to access your cash on demand, which is very important.

    The one thing that I won’t do — and that you shouldn’t do, either — is to put my money into a bank savings account, which typically pays yields approaching zero. The rates on those accounts aren’t likely to fall much, if at all, because they’re already so low.

    So if you’ve got $3,000 or more of cash sitting in a bank savings account but don’t have a money fund account, you’ll probably do well to open an account in a low-cost, high-quality fund.

    To be sure, unlike bank accounts, money funds aren’t backed by the Federal Deposit Insurance Corp. But there are plenty of high-quality, conservatively run low-cost funds. It’s a very competitive business, with $6.68 trillion in assets, according to Crane Data. They are highly unlikely to fail.

    The most important thing for you to do now is to stay calm and remember that if you end up doing nothing to cope with lower interest rates, you’ll have plenty of company. Including me.

    Warren Buffett, presidente y director general de Berkshire Hathaway, habla durante una partida de bridge tras la reunión anual de accionistas de Berkshire Hathaway el 5 de mayo de 2019, en Omaha, Nebraska. (Foto AP/Nati Harnik, Archivo)Warren Buffett, presidente y director general de Berkshire Hathaway, habla durante una partida de bridge tras la reunión anual de accionistas de Berkshire Hathaway el 5 de mayo de 2019, en Omaha, Nebraska. (Foto AP/Nati Harnik, Archivo)

    Don’t doubt WB: Warren Buffett in Omaha, Nebraska. (Photo: AP/Nati Harnik, Archivo) (ASSOCIATED PRESS)

    Last July, I wrote a Yahoo Finance column with the headline, Warren Buffett is turning 94 next month. Should Berkshire investors start to worry? I said that Berkshire Hathaway stock had underperformed Admiral shares of Vanguard’s S&P 500 index fund since my wife and I bought Berkshire shares in January 2016.

    Berkshire has since rallied and outperformed the S&P 500.

    At Thursday’s market close, Berkshire was up 253% (15.6% a year) since we bought it. During that same period, the index fund has returned 242% (15.2% a year), according to Jeff DeMaso of the Independent Vanguard Adviser.

    Score one for the Oracle of Omaha.

    Allan Sloan, a contributor to Yahoo Finance, is a seven-time winner of the Loeb Award, business journalism’s highest honor.

    Click here for the latest personal finance news to help you with investing, paying off debt, buying a home, retirement, and more

    Read the latest financial and business news from Yahoo Finance

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  • Video: ‘Declaration of Progress’: Biden Hails Fed Rate Cuts

    Video: ‘Declaration of Progress’: Biden Hails Fed Rate Cuts

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    ‘Declaration of Progress’: Biden Hails Fed Rate Cuts

    President Biden hailed the Federal Reserve’s move to begin cutting interest rates during a speech at the Economic Club of Washington.

    No one should confuse why I’m here. I’m not here to take a victory lap. I’m not here to say a job well done. I’m not here to say we don’t have a hell of a lot more work to do. We do have more work to do. But what I am here to speak about is how far we come, how we got here, and most importantly, the foundation that I believe built for a more prosperous and equitable future in America. So let’s be clear: The Fed lowering interest rates isn’t a declaration of victory. It’s a declaration of progress. It’s a signal we’ve entered a new phase of our economy and our recovery. I believe it’d important for the country to recognize this progress because if we don’t, the progress we’ve made will remain locked in the fear of the negative mind-set that dominated our economic outlook since the pandemic began.

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  • Video: Federal Reserve Cuts Interest Rates for the First Time in Four Years

    Video: Federal Reserve Cuts Interest Rates for the First Time in Four Years

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    Federal Reserve Cuts Interest Rates for the First Time in Four Years

    Jerome H. Powell, the Fed chair, said that the central bank would take future interest rate cuts “meeting by meeting” after lowering rates by a half percentage point, an unusually large move.

    Today, the Federal Open Market Committee decided to reduce the degree of policy restraint by lowering our policy interest rate by a half percentage point. Our patient approach over the past year has paid dividends. Inflation is now much closer to our objective, and we have gained greater confidence that inflation is moving sustainably toward 2 percent. We’re going to take it meeting by meeting. As I mentioned, there’s no sense that the committee feels it’s in a rush to do this. We made a good, strong start to this, and that’s really, frankly, a sign of our confidence — confidence that inflation is coming down.

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    The New York Times

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