How to respond to lower interest rates to best stretch your dollar

CEDAR RAPIDS, Iowa (KCRG) -- Late last month the Federal Reserve lowered interest rates to around 2%, a move that could have consequences on consumers' personal finances.

The Federal Reserve cut interest rates at the end of July. | Credit: MGN

Casey Mushrush, a financial adviser at Premier Investments of Iowa in Cedar Rapids, says if you are nearing retirement or are retired, the Fed's decision to cut interest rates may not be in your best interest. Mushrush warns the cut in rates could create uncertainty in some markets and in turn hurt your wallet.

"If we look at a lot of things that are actually tied to interest rates, long term care premiums, if we look at some of those different insurance accounts, we look at CD rates, those are going to be dropping as well, could even cause insurance premiums to be increasing actually," said Mushrush.

Musrush says it is his hope those nearing retirement or those who have retired already have a financial plan. If someone does not he believes they need to make one immediately.

"You want to make sure that you are staying the course as far as your overall investment strategy and that you've already gone through and tested against these low-interest rates to see whether or not you're going to have a high probability of success or not," said Mushrush.

For new borrowers, or those looking to make some long-term investments, you may be able to stretch your dollar further thanks to the cut in rates. One example is if you are looking to buy a new vehicle, the lower interest rates may help you negotiate a lower price with the dealership.

Perspective home buyers and current homeowners looking to refinance their mortgage could also make the cut in rates work in their favor.

"When we have these low-interest rates it creates an environment that you could actually potentially lock that in for a very long period of time again," said Mushrush.

Mushrush says he thinks credit card companies will not be lowering their interest rates despite the cuts. He recommends that if you buy something with a credit card that you pay it off.