On the heels of a three-quarter percent reduction in interest rates at an emergency meeting last week, the Federal Reserve Board chopped another one-half percentage point off the federal funds rate at its regularly scheduled two-day meeting, which ended yesterday.

The federal funds rate cuts could help stimulate the economy, by making it cheaper to borrow money for more spending.

Hours before the Fed's action, the government reported that the nation's economic growth had stumbled to a virtual halt. The economy grew at just a 0.6 percent pace from October through December, and for all of 2007 it logged its weakest performance in five years.

"The economy is hanging by a thread," said Stuart Hoffman, chief economist at PNC Financial Services Group.

While Wall Street rallied on each of the Fed announcements, they were unwelcome news for those who are trying to save. "There's no incentive to save if you're only getting 2 percent interest," said Jay Sukits, an assistant professor of finance at the University of Pittsburgh's Katz Graduate School of Business.

National City Bank recently informed customers that its money market and savings account rates will no longer be tied to indexes, but instead would be set by the bank. Mark Rendulic, National City's executive vice president for retail banking, said the policy change will give the bank flexibility to adjust interest rates as necessary in the future to stay profitable.

Banks across the country have lowered the interest rates they pay customers on savings accounts in response to the Fed's rate-cutting spree, which began Jan. 22 and has dropped the bellwether federal funds rate to 3 percent -- the lowest since June 2005.

Credit markets reacted to the news immediately. The rate that banks were offering on a one-year certificate of deposit fell yesterday to an average 3.53 percent, according to Bankrate.com.

While savers stand to lose income, borrowers -- especially mortgage borrowers -- could benefit from lower monthly payments on their home loans. Lenders currently are offering 15-year fixed rate mortgages for 4.96 percent.

"We're seeing very low mortgage rates again, and that's what touched off the mortgage crisis," Mr. Sukits said. "I don't know that you'll see that cycle again, because a lot of people and a lot of lenders have been burned. But I think you'll see a pickup in refinancings."

Also, homeowners with home equity lines of credit can expect to benefit from the Fed's funds-rate cuts because home equity loans are tied to the prime rate and other short-term indexes that fall in lockstep when the Federal Reserve cuts its benchmark rate.

The good news may not extend to people with adjustable rate mortgages if their loan is tied to the London Interbank Offered Rate, a commonly used gauge that moves independently of the federal funds rate. Subprime loans, in particular, are frequently linked to the London Interbank Offered Rate.

Other borrowers who may not be able to take advantage of the rate cuts are those with poor credit, because they have the hardest time getting credit to begin with.

"The average Joe who is trying to refinance doesn't have the high credit score necessary to get access to credit products that will get him into a lower interest rate category. So effectively he's boxed out," said Michael Sichenzia, chief operating officer of Dynamic Consulting Enterprises in Deerfield Beach, Fla., a firm that renegotiates mortgage debt for distressed homeowners.

"The lower rate doesn't help the average Joe with marred credit or no equity in their home to refinance," Mr. Sichenzia said. "So if you're behind on your mortgage, what good are the rates going down? That's why it's a tremendous misnomer that less people will go into foreclosure if rates are going down. That is incorrect. But that's the part no one talks about."

But credit cards are in a class of their own. Cardholders should not assume that credit-card rates are dropping just because the Fed is aggressively lowering interest rates. Issuers have the freedom to adjust their own rates.

"The rates for some of the more popular cards have actually increased," said Bill Hardekopf, CEO of LowCards.com. "It is very important to make sure you are getting the benefit of these rate decreases. If not, it is time to shop around for a credit card with a lower rate."

The central bank's rate reductions are meant to increase the money supply, ease consumer anxiety about a possible recession looming on the horizon and spur economic growth -- especially in the beleaguered national housing market.

Yesterday's interest rate cut was the Fed's third reduction in less than four months.

The federal funds rate is the overnight interest rate that banks charge to borrow from each other to meet their short-term liquidity needs. In and of itself, it doesn't have much effect beyond the banking system. But if a bank is deciding how much interest to pay a depositor for a three-month CD, it has to consider how cheaply it could borrow the money from other banks.

"Banks turn around and question if they should keep paying the same rate to customers when they can borrow from another bank for less," said Dr. Marvin Goodfriend, a professor at Carnegie Mellon University's Tepper School of Business. "Because borrowing has become less expensive in the interbank market, banks cut the interest they're willing to pay to depositors. Banks will not pay more than they have to to depositors."

John Boschen, a College of William and Mary economics professor who has served as an economist at the Federal Reserve Board in Washington, D.C., said flat or falling CD rates will discourage some investors from saving, and they will shift their capital to higher-appreciating assets.

But household savers, though, "are fairly insensitive to short-term movements in interest rates," Dr. Boschen said. "A saver who was earning 4 percent and now is earning 3.5 percent probably will not save less."

Another group of savers that will be affected are those who invest in bonds and bond funds. With rates dropping, longer-term bonds with higher rates could go up in price, said Paul Rudoy, managing director of the Horovitz, Rudoy & Roteman accounting firm, Downtown.

"For those in bond funds, this could go many ways," Mr. Rudoy said. "If the bond funds are holding higher-rate long-term bonds, this could work well. If the fund had very short-duration bonds, though, they will have a difficult time replacing maturing bonds with the same rates as those that come due."

With personal savings in a downward spiral, $2.5 trillion in consumer debt outstanding and trillions more in home equity lines of credit and adjustable-rate mortgages, advisers say the aggressive Fed rate cuts might encourage more accumulation of personal debt.

Michael B. Rubin, author of "Beyond Paycheck to Paycheck" and founder of Total Candor, a financial education company in Portmouth, N.H., said people with credit card balances will see minimal impact from the federal rate cuts, even if it were passed along completely -- $5.20 a month on a $5,000 credit card.

"So, clearly, if you want to take the next step toward financial freedom, you can't rely on further interest rate reductions," Mr. Rubin said. "You have to actually pay the debt."

While most banks will lower the amount of interest they pay for deposits over time, Mr. Rubin said savers can take advantage of online savings accounts, which often pay higher rates than those offered at brick-and-mortar establishments. He also pointed out that struggling banks tend to pay higher rates.

"Countrywide is in a death spiral, yet is paying 5 percent on minimum deposits of $10,000," Mr. Rubin said. "Banks must have cash to lend in order to make money, and the cheapest source of cash is customer deposits."