The Federal Reserve is aware of how these adjustments may positively or negatively influence investor and consumer behavior and tries to balance those competing factors. When interest rates go up, so does the concern about the health of the economy. 3.Your Investments Could Fluctuateįor those with money invested in the stock market, rising interest rates may impact your investments, at least in the short term, due to related market fluctuations. When interest rates go up, it's often the case that savings rates will go up as well due to the increase in the APY (annual percentage yield) being more attractive to savers looking to earn interest on their money. With the Federal Reserve increasing interest rates, that savings rate may also change. Saving Money May Become More AppealingĪccording to the Bureau of Economic Analysis, Americans were saved 3.1% of their income in September 2022 after paying monthly expenses. Instead of buying a car with all of the extras, you may decide to choose the base model or delay the purchase for another season. If you're thinking about making a big purchase, working through your expected monthly payments could influence your final decision or timing. You may also decide to forgo making purchases or financial moves. These budgeting conversations have the potential to change how you're thinking about future purchases that you may be considering. How much does it cost to borrow money or to lend money to customers? But it's also important to consider how interest rates influence the price of goods and services and their impact on your personal budget. Interest rates are often primarily viewed through the lens of borrowing and lending. But if you're wondering how higher interest rates could affect you personally, here are four unexpected ways rising rates could affect your finances. Raising interest rates typically slows down the economy and puts a damper on inflation. The Federal Reserve, or the Fed, as many refer to it, has been making headlines in recent months as it increases interest rates in the United States to get a handle on an issue that we're all familiar with- inflation. What’s the Potential Impact of Higher Interest Rates on Your Money?
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