Yes, the Fed just raised rates again. But take action rather than agonizing over what's ahead for the economy. If you're concerned because the Federal Reserve just raised interest rates again: Take a minute to get some perspective. When the Federal Reserve
raises interest rates to slow the economy and curb inflation, recession worries tend to surface. The fear is that the higher cost of money might brake the economy a bit too hard. Agonizing over interest rates, the soaring pace of inflation and the
ever-increasing cost of groceries, gas and most everything else — and on top of that, the possibility of a recession — it's just not worth it.
Here's how to worry less.
In a stock market trade, there's a buyer on one side of the transaction and a seller on the other. Each trader has a different perspective. Likewise, higher interest rates can be bad or good, depending on your situation.
To boil it down, rising rates are:
Bad if you're borrowing money or paying off debt. Good if you're saving money or retired and living off of interest.
Worrying gets you nowhere. Instead, consider small but impactful moves to improve your financial situation.
For borrowers and savers Borrowers will be on the hook for higher fees. Work to pay down debt to minimize the extra interest load and consider a balance transfer credit card to get a lower interest rate or an interest-free breather. Meanwhile, savers
are likely to see better returns and can leverage rising interest earnings by seeking out higher-rate savings accounts and beefier certificates of deposit.
For home buyers and homeowners If you're looking to buy, sell or refinance a home or tap a home equity line of credit, the mortgage rate transition from low to high gear might accelerate your plans — or stall them. While many real estate markets
are still very competitive, try to use looming higher mortgage rates as a negotiation tool.
Real estate agents, home sellers and mortgage lenders are well aware of what's happening with rates, and you just might tap into their anxiety by getting a lower price on a home or lower fees on a loan.
For small-business owners Rising interest rates may impact your small business in three ways:
If you have a student loan Student loan borrowers are already waiting to hear if President Biden may forgive some debt. Even so, any write-off will impact federal loans only. Meanwhile, private student loan borrowers face the possibility of higher rates.
Options for personal loans Personal loans often have fixed-rate terms, so current holders may have less to worry about when it comes to rising interest rates. But if you're shopping for a personal loan, getting one sooner rather than later may be in your
favor. WKFCU Personal Loan rates start as low as 9.0% APR.
Higher prices take a juicy chunk out of a paycheck. Nobody likes that. Here are some ways to protect your spending power from inflation:
And there's one big — and safe — money move that can earn you a walloping nearly 10% return. Series I savings bonds are government-guaranteed, and the rates are keyed to inflation. They have a minimum holding period of one year, though there's
a three-month interest penalty if held for less than five years.
Everyone reading this has been through a recession. Wrapped within the COVID-19 pandemic, the U.S. experienced a brief recession that peaked in the second quarter of 2020. That's a small blip on the radar compared with the Great Recession of 2008, fueled
by the housing crash and subsequent financial crisis. It was a slow, 18-month economic crash. Now the experts are debating if we're heading toward another financial setback. Rather than worry which is worse, the inflation disease or the slower-economy
cure, take action: Choose one or two of the ideas above, and put them to work.
(Partially reprinted from nerdwallet.com)
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*APR = Annual Percentage Rate
*APY = Annual Percentage Yield
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