When interest rates drop, savers feel the pinch first

Now that the Federal Reserve has cut interest rates for the second time this year, and with the average interest rate for a savings account at 0.1%, the potential to earn much of anything in a savings account is pretty bleak.

In an environment where rates are falling, banks feel pressured to lower the interest they charge for loans — and also the interest they pay depositors. But when the Federal Reserve lowers rates, savers are usually the first to feel the impact.

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