Net short-term interest rates have been low for an extraordinarily long time. News stories discuss the likelihood of the Federal Reserve raising interest rates, which has been expected for some time. Experts predict that interest rates will rise before the end of the year, though the Federal Reserve is evaluating disparate factors before deciding. The Federal Reserve typically looks to three main factors when deciding about rates: the stability of the dollar; stable oil prices; and a strong job market.
While in some ways a rise in interest rates could be beneficial to you, there are other ways that rate changes adversely affect you. Interest rate changes make loans cost more on each dollar borrowed, but they also help you receive more in earnings on your investments.
To see how they might affect you, first, assess your current and short-term future plans. Are you thinking about buying a car? Do you have some money you’d like to invest? An interest rate hike will affect you differently for each. As you plan to invest, talk to us about whether investing now or holding off a month or two would result in a higher return for you. If you are interested in bump-rate options, keep in mind that most investments offering bump rates limit the number of times they’ll increase your rate. It pays to wait on opportunities so that you end up locked in at the highest rate possible.
Conversely, if you are thinking of making a large purchase, or one that will involve committing to months or years of payments, consider taking action now. If you’re considering a new car, check out our calculators to plug in different rates and see how much you’d save depending on when you sign a contract.
A little advance planning can save you quite a bit or pay off for you long term. Think about your goals and how to put economic adjustments to work for you. For information on long-term savings or loan options, book a free consultation at 505-889-7755 (800-347-2838 outside the Albuquerque area), or visit a branch