By now you’ve probably heard that interest rates are going up again. In July, the Federal Reserve announced 0.75 percentage point hike, bumping the federal rate to a target range of 2.25 to 2.50 percent, with the possibility of another big increase by the end of the year.
The goal, of course, is to help bring inflation down. But what does this mean for your money?
If you’re feeling anxiety over rising interest rates, it might help to know that it’s not all bad. While it’s true that higher rates make it more expensive to borrow money, they also increase the amount of interest you can earn on your savings. The trick is to take advantage of the higher rates where you can while seeking out more competitive rates on your debt.
So how can you make the most of the latest economic changes? Here are five money moves you can make today:
1. Keep calm and carry on
Pause. Take a few breaths. Rest for a minute. Whatever helps you regain your inner peace. Money decisions are best made with a clear head and a relaxed state of mind.
Before you make any changes, consider taking advantage of the present moment to check in on your relationship with your money. Instead of acting on your feelings, sit with them for a while. Maybe even journal about them. The thoughts and feelings you’re having about money right now can reveal a lot about your subconscious money habits, which makes this a prime opportunity to do some mental rewiring.
As you take some time to reflect, ask yourself: Is action really necessary?
Sometimes the best thing to do is simply stay the course. If you’ve already got a solid money plan in place, there’s no need to shake things up by reacting to every twist and turn of the economy. And if a course correction is needed, it’s better to wait a beat and consider your options calmly. If you’re not sure, or you think you might need to move in a new direction, start by reaching out to our team at OCCU. We’re here to help you find a path through the uncertainty.
2. Check in with your money
During times of change, it’s tempting to put off thinking about money. That’s a common impulse when coping with financial stress. But avoiding your money during an economic time like this could have long-term consequences — and neglecting your problems won’t make them go away.
The most important thing you can do right now is take an honest look at your finances. Use our Financial Wellness tool on MyOCCU Online & Mobile to check in on your spending and savings goals. Are you sticking to your budget? Are you on track to meet your savings targets? Does anything need to be adjusted for inflation? Look for opportunities to improve your financial situation, such as high-interest debt you could pay off or money from past expenses that can be redirected toward new money goals.
3. Reassess your parked cash
If you’ve got some cash set aside, congratulations! That’s something to feel good about. Perhaps that money is sitting right where it needs to be — or perhaps it could do better somewhere else. We often park our cash somewhere and let it sit when there are more beneficial places we could be putting it.
Take stock of your savings and consider whether making money moves might be in order. If it’s idling in a low-interest savings account, for example, you might consider shifting it into a higher-interest savings option, like a certificate of deposit (CD) or money market account.
By earning more interest, you can help your money build some momentum and prevent inflation from decreasing its value.
4. Consider rate shopping
With interest rates rising fast, it’s time to re-evaluate the interest rates on all your money — both the rates you’re earning on your deposit accounts and the rates you’re paying on loans and credit card debt. If you want to push back on inflation, you can often make a pretty good dent simply by shopping around for the most competitive interest rates available.
Are you earning top-of-market rates on both your checking and savings? Take a look at our dynamic duo, Remarkable Checking and Ignite Savings, to see if they can help you earn even more. Could your long-term savings use a boost? OCCU offers CDs with rate bump options to supercharge your savings as interest rates rise. Do you have high-interest credit card debt? Consider a debt consolidation loan to help bring your rate down.
5. Keep pace with your long-term money goals
When the economic ground feels shaky and emotions are running high, it’s tempting to make hasty decisions about your money. But the economy has its cycles, just like each year has its seasons. Even when things feel like they’re changing quickly, just remember that they tend to correct themselves over time. In the long run, your best course of action is often to stick with your long-term money goals.
Economic storms come and go. It may not be smooth sailing right now, but by staying the course and keeping your financial destination in sight, you can still end up where you want to be. And don’t worry — you don’t have to navigate this alone. OCCU is here to help you every step of the way.