The Federal Reserve meets for the last time this year on December 10, and, again, the big question centers around what will happen with interest rates.
The federal funds rate certainly influences our everyday lives: It determines how expensive it is for Americans to borrow money, how rewarding it is to save, and, in more macro terms, it plays a part in major economic factors like inflation and employment.
Even so, you don’t need to wait for the Fed to act before taking control of your finances. The goal is to build a financial plan that isn’t dependent on guessing what the Fed or any other government agency might do. “I always try to help my clients build something that works no matter what the Fed does,” Don Grant, a CFP at Sabre Wealth, tells CNBC Select.
“The bottom line is the importance of planning — having a financial life that isn’t based on what the Fed might or might not do, but one that’s designed to weather the storm,” Grant adds.
No matter what happens with interest rates, here are three financial choices that consistently pay off.
Tackle high-interest debt
There’s no scenario where paying off high-interest debt shouldn’t be a top priority. Regardless of whether the Fed raises its benchmark rate, cuts it or keeps it the same, paying off high-interest debt is a smart move.
A big culprit of this is credit card debt, where interest rates are already so high that even a small decrease in interest rates wouldn’t make a big difference. You should get rid of this costly debt no matter what.
One way to do this is through balance transfer cards, which offer an introductory 0% APR period for paying off your credit card balance. For example, the Citi Simplicity® Card lets you pay off your debt interest-free for 21 months — nearly two years. Its balance transfer fee is also lower than competitors’.
The Citi Simplicity® Card may not earn rewards, but it can still save you money due to its amazing intro-APR offers.
- One of the longest intro-APR offers for balance transfers
- No annual fee
- No rewards
- No welcome bonus
Like with any balance transfer card, we suggest having a plan for how much you need to pay off each month to ensure the total balance is paid by the time the intro period is up (otherwise, you’ll pay interest after the 0% APR period). You must make at least the minimum monthly payment on a balance transfer card.
The Chase Freedom Unlimited® (see rates and fees) offers a bit shorter intro APR window of 15 months on balance transfers, but it offers cash-back rewards on your everyday spending, plus a welcome bonus.
The Chase Freedom Unlimited® is a no-annual-fee card that earns generous cash-back on everyday purchases and a lucrative welcome bonus.
- Valuable welcome bonus and high rewards rates
- Long intro APR for purchases and balance transfers
- No annual fee
- Has a foreign transaction fee
- Few rewarding ongoing benefits
Highlights
- Intro Offer: Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Enjoy 5% cash back on travel purchased through Chase TravelSM, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
- No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.49% – 27.99%.
- No annual fee – You won’t have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, in the first 60 days. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
Foreign transaction fee
3% of each transaction in U.S. dollars
If you have multiple high-interest credit card balances, you’re better off consolidating your debt through a personal loan. This means you’ll move these multiple credit card debts into a single new loan, with one monthly payment and potentially a lower interest rate.
Achieve is one lender that accepts those with bad credit, or borrowers with a FICO Score of 620, also offering several rate discounts and flexible terms and payment dates. Loan amounts range from $5,000 to $50,000 and loan terms are two to five years.
Achieve® Personal Loans
-
Annual Percentage Rate (APR)
-
Loan purpose
Debt consolidation, major purchase
-
Loan amounts
-
Terms
-
Credit needed
-
Origination fee
-
Early payoff penalty
-
Late fee
Pros
- Flexible term lengths
- Rate discounts available
- Works with borrowers with fair credit
Cons
- Loans may not be available in all states
- The lender charges origination fees
Maximize your savings
It’s (painfully) true that when the Fed lowers its benchmark rate, you’ll likely see the return on your savings account go down, too.
But if you have your money in a high-yield savings account — which is just as safe and secure as a traditional, brick-and-mortar savings account — at least you’re still earning an above-average interest rate.
Currently, the best high-yield savings accounts offer an APY hovering around 4% APY. Even if that rate were to drop, though, it would still outpace the national average savings rate of 0.40%, a few times over. The lesson is: If you’re going to have any money in a savings account, it should be where it’s earning the most interest possible. It’s always a good idea to maximize your savings, no matter the rate environment.
Plus, these days you can easily find a free savings account, with zero monthly fees and no minimums required.
Compare savings accounts
Lock in fixed rates
In an uncertain economy where signals may be mixed, it’s easier to plan your finances when you have predictability each month of what you have to pay.
If you need to borrow money or are looking to refinance, opting for a fixed-rate loan over a variable-rate loan can give you one less unknown; no matter what happens with interest rates, that loan payment each month will be the same and you can budget better knowing that.
Even if it means being locked into a slightly higher rate today than tomorrow (if the Fed were to lower rates), it gives you peace of mind of not having to worry what the Fed does. In a year, rates could go back up again and you’ll be happy you chose a fixed-rate loan that is less vulnerable to those fluctuations.
Looking to refinance your car loan? These offers include fixed APRs
Subscribe to the CNBC Select Newsletter!
Money matters — so make the most of it. Get expert tips, strategies, news and everything else you need to maximize your money, right to your inbox. Sign up here.
Meet our experts
At CNBC Select, we work with experts who have specialized knowledge and authority based on relevant training and/or experience. For this story, we interviewed Don Grant, a CFP at Sabre Wealth.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every personal finance article is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of personal finance products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics.
Catch up on CNBC Select’s in-depth coverage of credit cards, banking and money, and follow us on TikTok, Facebook, Instagram and Twitter to stay up to date.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.