Interest Rates are Rising — What to Do
You’re probably hearing a lot of news about rising interest rates, and wondering what it might mean for you. Rising interest rates affect everybody, making it important to understand what moves to make now before they get any higher. Keep reading for what to do about rising interest rates and why investing in gold should be part of your plan.
Why Are Interest Rates Rising?
According to the New York Times, the Fed increased the federal funds rate, a short-term borrowing cost for banks, in what officials have signaled is the first of a steady series of moves. Fed policy changes trickle out through other types of interest rates — on mortgages, car loans, and credit cards. Some of the interest rates that consumers pay to borrow money have already moved higher in anticipation of the Fed’s coming adjustments.
The NYT continues: The idea behind raising rates is simple: Higher borrowing costs can slow down inflation by tempering demand. When it costs more to borrow, fewer people can afford houses and cars, and fewer businesses can afford to expand or buy new machinery. Spending pulls back (something we’re already beginning to see). With less activity happening, companies need fewer workers. Less demand for labor makes for slower wage growth, which cools demand further. Higher rates effectively pour cold water on the economy.
Focus on Credit Cards
As interest rates increase, so will the interest rates on your credit card. This means you need to focus on paying those off or transferring them to a low (or zero) balance transfer. You can also take out a personal loan to pay them off, which will likely have a lower interest rate than your credit cards. This will allow you to give yourself a year or two to pay off the cards while protecting yourself from increasing rates.
Lock In Mortgage
Another move you can make is to lock in a mortgage. If you’re thinking about buying a house, now is the time. Home prices are rising, which means so will the interest rates. In short: these rates aren’t going down anytime soon.
An article by CNN explains that if you’re close to buying a home or refinancing one, lock in the lowest fixed rate available to you as soon as possible. That said, “don’t jump into a large purchase that isn’t right for you just because interest rates might go up. Rushing into the purchase of a big-ticket item like a house or car that doesn’t fit in your budget is a recipe for trouble, regardless of what interest rates do in the future,” said Texas-based certified financial planner Lacy Rogers.
The article continues: If you already have a variable rate home equity line of credit, and you used part of it to do a home improvement project, McBride recommends asking your lender if they would be willing to fix the rate on your outstanding balance, effectively creating a fixed-rate home equity loan. Say you have a $50,000 line of credit but only used $20,000 for a renovation, you would ask to have a fixed rate applied to the $20,000.
Find a New Bank
Your big bank isn’t going to keep giving you a competitive rate. It’s time to shop around! CNN explains that if you’ve been stashing cash at big banks that have been paying next to nothing in interest for savings accounts, don’t expect that to change just because the Fed is raising rates, McBride said. That’s because the big banks are swimming in deposits and don’t need to worry about attracting new customers. But online banks, which are looking to keep current accounts and attract more business, are offering far better rates and are actively increasing them as benchmark rates go higher. So it’s worth shopping around.
Investing in Gold to Hedge Against Inflation
One of the best ways to protect your savings, your other investments, and your retirement is by investing in gold to hedge against inflation. As inflation rises and the value of the dollar decreases, the value of gold rises. Start investing in gold now so that you can lock it in at a great price before it goes up even more.
- Investing in gold is simple and takes little-to-no previous knowledge or experience
- Gold is highly liquid, which means you can grab your cash whenever you need it. No need for waiting or a long process, such as investing in real estate.
Investing in Gold with Priority Gold
Investing in gold is easy. If you are ready to protect your savings and secure your future, we can help. Priority Gold is one of the most trusted precious metals dealers in the United States with BBB A+ Rating, AAA Rating with Business Consumer Alliance, and 5 Stars Rating with TrustLink.
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