The interest rates are expected to get cut by the Federal Reserve. Many have been waiting for this moment because the cost of borrowing money will get cheaper. When interest rates get cut so does the rates for mortgages, car loans, and your savings account rate. You can get an auto loan at a lower rate but don’t forget that your ability to collect interest on your savings account is affected also.

I’m not in the market to get a mortgage or purchase a car. So does this really affect me? Like I said, interest rate cuts mean lower savings rates. I am expecting to see my high yield savings interest rate to decrease after the Fed announces interest cuts. It’s expected that the Fed will, not just cut rates once, but multiple times in the future. Again, great if you are in the market for a mortgage or car loan. Not so great if you’re trying to collect a high return on your savings account.

Anticipating that a cut is coming, I opened a CD (certificate of deposit). It’s a type of savings account that typically has a higher interest rate than a high yield savings account but there is fixed term applied to this. This means that your money is locked in for that period and you cannot withdraw your money without penalty.

I locked in a 9-month CD. Once the CD matures, I will have the option to renew the CD at the current rate or move my money plus the interest I earned out of it. I don’t believe interest rates will be going up anytime soon, rather interest rates will be going lower which is why I locked in a 9-month CD. Could I have locked in a longer term? I could have but the bank was offering a lower interest rate for a longer term. The risk is that after the 9-month CD matures, the interest rates could be even lower and at that point my money will be earning less. Lock in now for a longer term with a slightly lower rate or lock in a higher rate but for a shorter term. I chose the shorter term and I’ll figure out my next steps in 9 months. Interest rate cut, lock in a CD is what I am doing. If you are interested in following my journey and their journey, follow them on Instagram and email subscribe to get alerts of latest posts or follow me on Facebook, Instagram, and Pinterest.