The Federal Reserve is widely expected to cut interest rates again during its next meeting, but what does this mean for the average American? The move may end up helping people who owe money by easing interest rates on variable-rate credit cards and adjustable-rate mortgages. Those facing an ARM reset should still expected higher payments, but not as high as they may have been otherwise. Consumer loans and financing will also be somewhat cheaper - that is, those looking to finance credit card debt or take out home equity loans will be able to do so at lower costs.

Rate cuts are good for the economy because it makes debt much cheaper for companies. And companies able to borrow more are able to leverage themselves to better take advantage of growth opportunities. This sometimes equates to more investment and more hiring and therefore lower unemployment numbers.

So, why doesn't the government keep reducing rates if it's so good for everyone? Well, there is one downside to rate cuts: inflation. Essentially, higher inflation results in reduced purchasing power for those on fixed income; wages being insufficient for purchasing power; and problems with import/export businesses due to more expensive prices relative to the rest of the world.