SPRINGFIELD, Mass. (WWLP) – Federal Interest rates will increase by the end of this year according to the federal reserve, but what does this actually mean for you and your money.
Higher federal interest rates is a sign the economy is getting stronger. However, Higher rates will make money more costly to borrow. But it can also help you save by increasing the interest paid to you on the money you put in the bank
“The era of point one percent in bank accounts is a little ridiculous, so I’d like to get some return on savings so looking forward to that,” said Ed Clark of Longmeadow.
But it may also make it harder for people to climb out of credit card debt.
“That’s why I don’t use my credit card, debit card I know I’ve got the money in the bank and I don’t have to pay the interest. but what can you do,” said Heriberto Andrew from New York.
Experts say you should consider how this hike will affect your personal finances, they also say you may want to take out a mortgage while the rates are still lower.
When interest rates rise your credit score becomes even more important. Improving your credit score can help counter the rising interest rates since you will be able to qualify for lower rates.
Another tip, choose a short term for a certificate of deposit so you can lock into a longer term when rates are higher.
We can expect to see an increase in those rates by the end of the year. A big sign that interest rates will rise is the lower unemployment rates and rising inflation.