The Federal Reserve policymakers and chairman Jerome Powell shared that after their November meeting, they will be keeping interest rates near zero. They plan on holding out a bit longer although the economy has been making gains. Though they may be keeping interest rates low now, this will not last forever. The economy is recovering from the peak of COVID-19 but inflation is now rising and is at a 30 year high this October 2021. As the unemployment rate is falling, it is predicted that the Feds will raise the rate as soon as 2022.
That means, now may be the time to splurge on an excursion or take out a loan for a necessity. Below are five wise money moves to make before the rate rises.
1. Refinance your home
According to a Zillow survey, more than 75% (78% to be exact) of homeowners didn’t take advantage of the low rates and refinance. Those who did take advantage of a new rate are now saving around $300 a month on their mortgage payments. Although mortgage rates fell drastically during the beginning of the pandemic, they have been going through some highs and lows this past year. Despite that, the 30 year mortgage rate currently is still around 3%, with predictions to rise to 4% next year by the Mortgage Bankers Association. Now might be time for you to refinance.
2. Consolidate your debt
During the pandemic, many consumers paid off their credit card balances in full every month due to the difficulties in traveling, paying for food, and shopping. An all time high of 35.1% of full payments by consumers was reported by the American Bankers Association. Still, some houses are struggling and if a house is relying on credit cards to make ends meet, the interest is about to raise. It may be time to consider a low cost debt consolidation loan to help avoid high interest rates and propel you out of debt sooner.
3. Work on your credit score
Companies are making it fairly easy to take a free look at your credit score to see if it needs improvement. You may want to take a peak and see if it could use some raising before the feds raise the rates and make it harder to get a loan. Boosting your credit score will make you look more attracted to all lenders, from mortgage loans to new credit cards.
4. Refinance your student loans
Currently, federal student loan payments and interest are on pause until January31st. Some Democratic lawmakers including Sen. Elizabeth Warren and Senate Majority Leader Chuck Schumer, are urging President Joe Biden to forgive up to $50,000 per person. Some students may have taken out private student loans though, and have not been given the pause on paying them. If that is you, refinancing your loans may save you thousands in interest fees and shave time of your debt years. Student loan refinance rates have been at an all time low this year. Compare your options with multiple agencies to see what serves you best.
5. Ride the stock market
These current low rates consequently mean that you won’t be earning much if you put your money into a savings account. If you want your money to work for you more and are willing to take the risk, consider investing. Even if you don’t think you have much extra cash to put aside, there are many apps now to help you track which investments would be a good fit for you.
Source: Yahoo News