3 Financial Moves to Make as Soon as the Fed Lowers Interest Rates

When inflation started surging, the Federal Reserve had no choice but to raise interest rates in an effort to get it to cool. But now that inflation isn't nearly as rampant, the Fed is poised to start cutting interest rates later in 2024. 

At this point, we can't say exactly when those rate cuts will happen. But once they do come to be, here are three financial moves you may want to make. 

1. Consolidate credit card debt into a personal loan

If you're juggling multiple credit card balances, you may be doing more than just stressing yourself out to keep tabs on those payments. You may also be accruing loads of interest. 

Once the Fed cuts interest rates, you may find that borrowing becomes less expensive across the board. At that point, it could be a good time to consolidate costly credit card balances into a personal loan. 

That way, you'll only have a single monthly payment to worry about. And just as importantly, you'll have a fixed monthly payment that could be much easier to fit into your budget than credit card bills with variable interest rates attached to them.

2. Sign an essential loan you've been putting off

Maybe your air conditioning system at home gave out last summer, and you really need a new one in place ahead of the upcoming warm weather season. If you've been waiting to tackle a major home repair because you didn't want to finance it at a time when interest rates were up, aim to do so once the Fed lowers rates.

Similarly, maybe driving your car is becoming an increasingly precarious prospect by the day. If so, you may want to buy a new one -- and finance it via an auto loan -- once the Fed lowers interest rates and it's not quite as expensive to finance a vehicle purchase.

3. Pay attention to when your current CDs are set to mature

A lot of people locked in CDs in 2023, when rates were up. Once the Fed lowers interest rates, CD rates might start to fall. And if they fall to a large enough degree, you may decide that it makes more sense to keep your money in a regular savings account rather than renew your CDs when they come due.

As such, once the Fed cuts rates, mark your calendar so you're aware of when your various CDs are set to mature. Often, if you don't actively tell your bank not to renew your CD at maturity, it'll roll over into a new CD with the same term automatically. You'll want the opportunity to assess your options if interest rates are lower than where they are today.

We don't know exactly when the Fed's first interest rate cut will happen. But it's important to be prepared for when rate cuts occur. In addition to the moves above, think about your financial needs and goals, and figure out how lower interest rates might play into some of your other money-related decisions.