What Rising Interest Rates Mean for Your Wallet
Interest rates have a bigger impact on your wallet than you may realize. With rates forecasted to continue rising in 2023, you can expect to pay more on things like credit card debt, mortgages, car loans, and other everyday purchases. That’s why it’s important to take steps now to save and pay down debt so you don’t end up paying more for borrowing in the long run.
Although interest rates are projected to rise to as high as 5.1% this year, according to the U.S. Federal Reserve, there’s a bit of good news for consumers. Higher rates by the Federal Reserve mean consumers will see a higher return on their savings, and ultimately, more money back in their pocket.
What is the role of the Federal Reserve?
There’s a bank that you use to save and manage your money – and then there’s the bank.The Federal Reserve, or “The Fed,” is the central banking system of the U.S., providing a safe and stable financial system by overseeing the nation’s banks and influencing interest rates. While it doesn’t interact directly with consumers, the policies it sets ultimately affect the way you make financial decisions for things like savings, consumer credit and home loans. The intent of raising interest rates is to lower inflation and moderate economic activity by reducing the supply of money in circulation. Higher rates mean more expensive loans for consumers and businesses, not to mention a higher cost of credit. Here’s how rising interest rates could have an impact on your wallet:
• Opportunities to Save:
Higher interest rates might not be good news for consumers looking to borrow funds, however they can present savings opportunities if you have a deposit account. Rate increases impact deposit annual percentage yields (APYs), the percentage of interest earned on a deposit account or investment, which are determined by the current interest rate. As rates increase, banks increase the amount of what you earn, presenting an opportunity to earn more on checking and savings accounts, certificates of deposit (CDs), and other deposit accounts.
• Paying off Debt:
The prime rate, which determines most credit card variable annual percentage rates (APRs), is impacted by federal rates, so you can expect your consumer credit to be impacted by rising interest rates – whether that’s your personal loans, lines of credit or credit cards. By keeping up with paying off your credit card balance on time monthly, an APR increase won’t have a major impact for you.
• Buying a Home:
Since 90% of new mortgages have fixed rates, the actual cost of borrowing for many households has not changed, even as interest rates have risen. However, for new homebuyers, higher interest rates could mean a higher mortgage rate, or if you have an adjustable rate mortgage loan, your monthly payment could increase.
How do rising rates affect your financial plan?
The Fed has been raising interest rates for an extended period of time and is expected to continue doing so. As a result, you may feel pressure to act now to lock in lower rates and make a big financial decision. Making choices under pressure is when you’re most likely to think (too) fast.
Now is a good time to review your savings, investment and budget plans, and identify your financial goals for 2023. Then, connect with a dedicated advisor to work one on one with someone who’s committed to understanding your needs and helping you achieve those financial goals. Visit chase.com/advisor for more information.
Sponsored content from:
brightstarts boldfutures!
THE GIFT OF LITERACY
Drew University’s Master of Arts in Teaching Provides a Pathway for Students to Live Their Passion
Education: Building an Equitable City
Spelman College: A Tradition of ExcellenceSpelman College:
Community Education Forum with Alfred Bundy guests: Dr. Elvy Vieira & Anthony Smith of Lincoln Park
5 Things to do When you Get Your First Paycheck
New York must open Crisis Stabilization Centers: People in Mental Health throes need immediate help
The Grid Collective
THE GIFT OF LITERACY
Barber School
The Wrap-Up Report
Newark Beth Israel Medical Raises the Flag for Pride Month
Assemblywoman Timberlake Celebrates Community Trailblazers
Malcolm X would have been 98 today
Staten Island Black History Town Hall
HBCU/Divine Nine Greek Sunday Service
Nicole A. Davis: Executive Director Center for Food Action
Mother’s Day Edition
Kimberly Council: Deputy Brooklyn Borough President
President Obama Names the City of Newark a My Brother’s Keeper Alliance Model Community
Newark Beth Israel Medical Raises the Flag for Pride Month
Let’s Talk About Mental Health
Give Your Body to God
New York must open Crisis Stabilization Centers: People in Mental Health throes need immediate help
Newark Beth Israel Lung Transplant Recipient Received the Most Advanced Technology and Expert Care on Her Transplant Journey
