Wednesday, January 23, 2008

Another Fed Rate Cut

Jeez, this year has started with a turmoil in the stock market, what a way to start the year? I wonder, where this drop will lead to. Looks like history repeat itself and now the stock market globally is showing how globalization pull each other down. To steadfast the drop on this Tuesday morning of 01/22/2008 Fed called an impromptu meeting and cut the lending rates by 0.75% to make it to 3.50% from the whooping 4.25%. This provided a cushion to the stock market crash as this move kinda off opened the parachute on the stock market and the wall street glided itself down instead of crashing down at a high speed. There is again a possibility that Fed will again cut the rates when they meet on Jan 30,2008 for the scheduled meeting. Fed also lowered the rates for the banks to borrow directly from the central bank to 4.00% .

The million dollar question that arises is What does this mean to you and me? My two cents on this is now it is a good time to call the credit card companies and ask them to lower the APR This move will also effect car buyers as the auto loans and home equity lines will be reduced. Had the gas price been lower we would have seen some good times for FORD and GM, but lets hope new first time car buyers will get the bargain.

The interest rate drop will prompt few home buyers who have fixed rate mortgage to refinance the house as this drop will surely save a big chuck of interest over the mortgage loan's life. Hopefully, this will easy up the sub prime mess for the lenders.

Down side is the savings accounts will look less attractive as the interest rate drops faster then the big apple coming down on midnight in NYC. This can be a good time to invest in CD's and lock in the prevailing rates. I did run a query on the for higher yield rates for 1 year and found the best rates been provided by Flagstar Bank (4.83%),Intervest National Bank(4.64%) and Advanta Bank Corp (4.59%). You can check the full list of the high yield CD's for 1 year here.

If any of you have information of higher yield CD's please do mention it in the comments.

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