3 Ways to Make the Fed's Moves Work for You

Here's how to take advantage of low interest rates without letting lenders take advantage of you.

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Consumers still have the chance to negotiate favorable interest rates, which are close to historic lows. Now is the perfect time to call credit card companies to ask for lower rates, lock in favorable financing on car loans, or refinance homes. But it's not as simple as checking the latest move from the Federal Reserve. Here's what consumers need to know:

Credit card companies are more willing to offer lower rates

Card providers often say yes to consumers who ask for lower rates, especially when those consumers have a record of paying off their bills each month. But now is a particularly opportune time to shop around or call providers and ask for lower rates, says Bill Hardekopf, chief executive of LowCards.com. Companies are eager to keep their best customers, and the average credit card rate is just over 13 percent, a two-year low, according to IndexCreditCards.com.

The downside: Even consumers with so-called fixed-rate cards can find their interest rate climbing again for a variety of reasons unrelated to their own behavior, including economic ones such as higher inflation.

Auto loans are relatively cheap

Consumers in the market for a new car are in luck because the current low interest rates mean that consumers with solid credit scores can get relatively inexpensive financing of their vehicles.

The downside: Another emerging trend can hurt consumers: Car loans are getting longer—one recent J.D. Power & Associates study found that one quarter of car loans now stretch out over six years or longer. That means consumers are spending more on interest. LeaseTrader.com estimates that with a seven-year car loan, a $20,000 car will cost an extra $5,335 in interest. To take advantage of the current market, consumers should lock in the lower interest rates and arrange to pay their loans off in as little time as possible.

It might pay to refinance

"Now is a good time—assuming [a consumer is] creditworthy—to be looking into getting a fixed-rate mortgage," says banking consultant Bert Ely. According to Freddie Mac, the average 30-year fixed-rate mortgage is just over 6 percent—up slightly over the past several weeks but down from around 6.5 percent two years ago. The average 15-year fixed mortgage is about 5.6 percent, making it a better deal for those willing to make higher monthly payments. "The rate savings aren't insignificant," says Ely, who recommends consumers look at the 15-year option, in addition to adjustable-rate mortgages for those willing to accept rate fluctuations.

The downside: Refinancing carries fees, generally around 1 to 2 percent of the loan's value. While refinancing to pay off credit card debt is a tempting solution to consumers paying high interest rates on their plastic, it also increases the risk of foreclosure if consumers can't pay their monthly mortgage bill.