Getting the best interest rates on mortgages, auto loans, personal loans, and even credit cards depends largely on two things – your credit score and the market. Yesterday, the Federal Reserve raised the interest rate by .25% and they “signaled” two more planned interest rate hikes this year alone – that means that the rates on every single loan of any kind can be expected to go up by that same .25%.
Now, while that doesn’t seem like a lot of money, over the term of any loan, it can add up to a significant amount of money that you will pay in interest. For example, that 30 year home loan, or that 6 year car loan, or even those credit cards that you’re only paying the minimum payments on each month… ALL of them will cost more, and not just with this rate increase, but with the two more that are expected before the end of this year.
So, what should you do? Well, if you’re considering buying a home or a new car, now is definitely the time to lock in those loans! And those credit cards? Maybe it’s time to take out a personal loan at a lower, fixed rate so that you can get those paid off, too. But remember, interest rates are going up again, so you don’t have much time to waste. Here are some of the best personal loan offers we’ve found today:
Want to dramatically improve your overall financial picture?
While it does take a lot of restraint, patience, and time to make significant financial changes, you have to remember that, when it comes to your money (and your credit score), it’s a lifetime journey. Yes, there will be some unexpected curves, a few peaks and valleys, and likely a few bumps along the way, but if you do your best to stay on track, you will eventually find that financial security is possible regardless of your income level.
Here are our top five recommendations for improving your finances:
Manage Your Credit Cards Wisely
With interest rates rising, credit card debt becomes much more expensive, even for those of us with excellent credit. The easiest way to manage your credit cards is to use them sparingly and pay off as much as you can every month. Balance transfer cards are an excellent way to lower your interest rates and free up more cash to pay down the debt. Just be careful – too many credit inquiries can hurt your credit score and if you don’t get the balance paid off before the promotion ends, you could end up paying interest from the time you transfer the balance!
Pay Off Your Student Loans Sooner
Let’s face it, almost no one can afford to go to college without some type of student loan, so there are plenty of people out there struggling with student debt, and it’s keeping an entire generation from buying their first home, their first new car, or in some cases, moving out of their parents’ home. If you’re one of those whose student debt is holding you back, then you need to make a plan to pay off your student loans. Start by paying extra every month if you can afford to, either write a bigger check or have your employer do an automatic payroll deduction that goes straight toward your college repayment. You’d be surprised at how quickly you can do this if you just set your mind to it.
Make a Savings Plan and Stick to it
Did you know that more than half of the people in this country essentially live paycheck to paycheck, with little or no money saved to cover those unplanned emergencies? What about you, how much do you have in your savings account? Do you even have a savings account at all?
Although it seems impossible at first, you can save something if you try hard enough. The first thing you have to do is take a long hard look at what you’re spending… Do you really need that $5.00 cup of coffee in the morning? Can you skip that expensive dessert when you go out to dinner? Do you really watch all 700 of the channels that you pay for each month? Once you identify areas where you can reduce spending, put the amount that you’re saving directly into savings and resist the urge to spend it on something else. Remember, if you lived without spending that money on something else before you had the extra money in your budget, chances are you can continue to live without it.
Don’t Forego Saving for Retirement
When you’re young, retirement seems like a lifetime away, and it’s really easy to tell yourself that there’s plenty of time, that you’ll save extra later, and so one. But the truth is, if you’re not saving now for retirement, you likely won’t save enough later, either. And one day, you’ll “wake up” and realize that you’re not going to be able to retire unless you do something drastic… trust me, that’s not a good feeling.
Instead, start now. Join the 401(k) at work and make sure that you’re taking full advantage of the employer’s match if there is one, if not, put money into the account anyway and increase the contribution as often as you can. Retirement really is closer than you think.
Get Professional Help
Have questions you can’t answer? Looking for sound advice on your budget, your credit report, or your retirement plans? Don’t hesitate to seek the advice of a trained professional when and if you need it. It’s worth every penny spent in the long run!
Interest rates for home mortgage loans have risen since November. Experts have taken notice — and so have homebuyers, since rate increases generally make homes less affordable.
What’s a prospective homebuyer to do? Wait for rates to drop again? Buy now, before they go even higher?
“The most important thing is to keep perspective,” says Greg Jaeger, president of USAA Residential Real Estate Services. He says rates were at 18% when he bought his first house in the 1980s, four times what they are today.
“Over the past eight years, we’ve become so conditioned to extremely low interest rates that some people get concerned about any increase, even when the rates are historically still very low,” Jaeger says.
But interest rate fluctuations represent real money to consumers. For example, as the rate crept up from November’s 3.3% to 4.125% two months later, the monthly payment on a 30-year conventional loan for $250,000 increased by $115.
For Jaeger, even the higher cost has a silver lining. “It may tip the scale for some potential homebuyers, but if it helps them look again at a home’s affordability, it could protect them from financial overreach.”
Interest rates fluctuate daily, and even throughout the day, but the changes typically are small. Even a bigger jump in interest rates could be offset by a decrease in home prices, so Jaeger advises not trying to time the market. “Instead, focus on the big picture,” he says. “Can I afford this? Does my budget allow a mortgage payment, and all the things that come with homeownership, and still allow me an emergency cushion and savings?”
If not, now may be a bad time to buy, no matter what the interest rate is. On the other hand, if your financial and personal situations make homeownership a good deal, buying at the current rates may be one of the best investments you ever make.