What financial experts suggest for taking advantage of the Fed's first rate cut in years.

• Lowering interest rates by the Federal Reserve will affect various financial products, including car loans, mortgages, and credit cards.
• Here's how you can position yourself to benefit.

Based on the latest inflation data, the Federal Reserve may lower interest rates as early as next month.

At a press conference following the last Federal Open Market Committee meeting in July, Fed Chair Jerome Powell stated that the time was approaching.

For Americans facing high interest charges, a possible September rate cut could provide relief, especially with proper planning.

"As a consumer, now is the time to ask: 'What does my spending look like? Where can my money grow the most and what options do I have?'" advised Leslie Tayne, a debt relief attorney at Tayne Law in New York and author of "Life & Debt."

To prepare for the election, "emotion-proof" your portfolio. The recession is coming, and music can predict economic trends. Despite inflation cooling, more Americans are still struggling.

Officials from the Federal Reserve are indicating that they anticipate lowering the benchmark rate in 2024 and four times in 2025.

Some experts predict that the benchmark fed funds rate will decrease from its current range of 5.25% to 5.50% to below 4% by the end of next year.

Although the federal funds rate is not the rate consumers pay, the Fed's actions impact the rates they see daily on products such as private student loans and credit cards.

Here are five ways to position your finances for the months ahead:

1. Lock in a high-yield savings rate

It is advised to secure some of the highest returns in decades as rates on online savings accounts, money market accounts, and certificates of deposit are predicted to decrease.

Online savings accounts are currently offering rates above 5%, which is significantly higher than the rate of inflation.

If the central bank reduces its benchmark, a typical saver with $8,000 in a checking or savings account can earn an extra $200 a year by moving that money into a high-yield account with an interest rate of 2.5% or more, according to a recent survey by Santander Bank in June. Most Americans keep their savings in traditional accounts, which currently pay an average of 0.45%, according to FDIC data.

It is advantageous to secure the best CD yields currently available, which surpasses inflation targets, according to Greg McBride, Bankrate.com's chief financial analyst," said McBride. "Waiting for better returns later is not worth it.

A high-yield savings account currently offers more than 5.3%, according to Bankrate.

2. Pay down credit card debt

As the prime rate decreases with a rate cut, variable-rate debt interest rates, such as those on credit cards, are likely to follow suit, lowering your monthly payments. However, APRs will only ease off extremely high levels.

If you pay $250 per month on a card with a $5,000 balance at an average interest rate of nearly 25%, it will cost you more than $1,500 in interest and take 27 months to pay off, according to LendingTree data.

If the central bank reduces interest rates by a quarter point, you will save $21 and pay off your balance one month earlier. However, this is significantly less than the savings you could achieve with a 0% balance transfer credit card, according to Matt Schulz, LendingTree's chief credit analyst.

Instead of waiting for a slight adjustment in the months to come, borrowers can switch to a zero-interest balance transfer credit card or consolidate and pay off high-interest credit cards with a personal loan, according to Tayne.

3. Consider the right time to finance a big purchase

Waiting for lower interest rates could reduce the cost of financing if you're planning a major purchase like a home or car.

Purchasing during periods of lower interest rates can result in significant savings over the course of the loan, according to Tayne.

Fixed mortgage rates are tied to Treasury yields and the economy, but they have decreased from recent highs due to the possibility of a Fed-induced economic slowdown. The average rate for a 30-year, fixed-rate mortgage is currently around 6.5%, according to Freddie Mac.

According to LendingTree's calculations, a lower interest rate on a $350,000 loan today, compared to a recent high of 7.22% in May, would result in a monthly savings of $171 and an annual savings of $2,052. Over the lifetime of the loan, this would amount to $61,560.

Lower mortgage rates could increase homebuying demand, which would raise prices, McBride stated.

The future of the housing market is uncertain due to the decline in mortgage rates and the level of supply, as stated by Channel.

"Timing the market is virtually impossible," he said.

4. Consider the right time to refinance

Once interest rates decrease, there may be more refinancing options for those struggling with debt.

As the Federal Reserve cuts interest rates, the variable rates on private student loans, which are tied to indices such as the prime or Treasury bill rate, will decrease.

Mark Kantrowitz, a higher education expert, suggests that borrowers with existing variable-rate private student loans may have the option to refinance into a more affordable fixed-rate loan in the future.

The interest rates for private refinance range from a low of 5% to a high of 11%, he stated.

Refinancing a federal student loan into a private loan means losing the safety nets that come with federal loans, such as deferments, forbearances, income-driven repayment, and loan forgiveness and discharge options. Furthermore, extending the term of the loan will result in paying more interest on the balance.

David Peters, founder of Peters Professional Education in Richmond, Virginia, advised against extending loan terms and recommended keeping the original payment plan to minimize principal payments without affecting cash flow.

Depending on your current rate, home and auto loan refinancing opportunities may also be available.

5. Perfect your credit score

Those with better credit could already qualify for a lower interest rate.

The average rate on a five-year new car loan has increased to nearly 8% due to inflation's impact on financing costs and vehicle prices.

McBride stated that financing is just one variable, and it is relatively small compared to other factors. For instance, a reduction of 0.25% in interest rates on a $35,000, five-year loan would amount to $4 per month.

McBride stated that consumers would benefit more from paying off revolving debt and improving their credit scores, which could lead to better loan terms.