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How Do The Increasing Rates Affect Me?

Published: December 12, 2018

The economy is bouncing back from the 2008 recession, which means that you're starting to see the interest rates climb. If you haven't noticed yet, you'll notice very soon. The Federal Reserve has been increasing the rates 0.25% a few times this year. With the rates increasing, you may be asking how this will impact you. Here's how the increasing rates will affect you.

Savings

The increasing rates means that the savings rates are increasing as well. They may not be as drastic as loan rates, but they can still impact you. If you're looking to put some money into a CD or Money Market savings, the increase in rates can be beneficial. Some financial institutions are increasing their rates on CDs and Money Markets to encourage people to open an account with them.

What to do? If you're in the market to open a savings account, make sure you do your research. There are so many financial institutions that are looking for your business, that you want to make sure you find the best deal at the institution that fits your needs. Don't settle for your everyday institution if you can get a better rate somewhere else.

How can we help? In order to benefit our members, we raised our CD rates and Money Market rates. You can check out our rates page for more information when you're doing your research.

Credit Cards

Most credit cards are variable rate cards, which means that as the rates increase, your balance and time it will take you to pay off your credit card also increase (if you only pay the minimum payment every month). If you are only paying the minimum payments every month, you should look into other options on how to pay down your debt before the rates increase too much.

How can you protect yourself? If you see the rates continuing to increase over a period of time, but can't pay off your balance quickly, you can opt to do a balance transfer to a card with 0% APR (annual percentage rate), or to a card with a fixed rate. Once you transfer your balance, work on paying down the balance as quickly as possible, but make sure you're following the terms and conditions for that rate. You don't want to end up paying more in interest because you didn't follow their rules. 

Auto Loans

If you're in the market to buy a new car, it may be beneficial to look into securing a loan and buying now. With the rates increasing, you may end up with a higher interest rate than what you could get now, which means that you may not be able to afford the car you wanted. 

What can you do? If you know you are planning on buying a car, start shopping around. Figure out how much money you're going to need to finance and what the interest rates are around the different institutions. Do the work before stepping foot in the dealership. You can also plan ahead and calculate any potential rate increases to see how much more money you'll spend in interest, then make your decision from that. Don't feel rushed into it, but also don't wait until the interest rates are double what they are now. Figure out what works for your finances and make a game plan from that.

Mortgages

If you're planning on purchasing a new home or refinancing your current home, make sure you're looking at fixed-rate mortgages. The adjustable-rate may be tempting, but with the rates increasing, you may end up with a very high interest rate, which could lead to problems.

What are your options? If you're currently in an adjustable-rate mortgage, you can look to refinance into a fixed-rate mortgage before the rates increase drastically. If you're in the market to buy a new house, make sure to select a fixed-rate mortgage that way the increases won't affect you.

Student Loans

The majority of college students have some type of loan they used to pay for college. If you have any private loans, you need to make sure that they aren't adjustable-rate. This could end up costing you thousands more dollars because of the rate increases. 

What should you do? If you currently have private loans that have adjustable rates, refinance them into a fixed-rate loan ASAP. Depending on when you went to school, you could also get a lower rate than what you're currently paying. Make sure you do your research before refinancing.

As scary as the increasing rates may be, you don't have to worry too much. Just make sure that you're prepared and keep track of the Federal Reserve. If you notice that things are increasing more frequently or you're at the point where you can take the necessary steps to protect your finances, do so as soon as possible. That way, you're not paying extra in interest until you're ready. You can visit any of our branches for assistance on what products will work best for your finances.