The U.S. Federal Reserve has not raised interest rates
recently, but is expected to late this year. What does this mean for consumers?
Enterprises TV offers an action plan to tackle before interest rates rise.
Home equity lines of credit and credit cards both have
interest rates set by the Federal Reserve. Chances are payments may be higher
for both of these later in the year. If
a homeowner has a low fixed-rate mortgage, there is nothing to worry about. But
it makes sense to use a payment calculator to see what might happen to the
interest rate on a loan.
Keep paying down the balance on the home equity loan until
it is affordable.
The same applies to credit cards. The usual rule of thumb is
to pay off as much of the credit card balance as possible, and utilize 10
percent of the credit line. When the Federal Reserve raises interest rates,
open balances will go up, thus putting more pressure on the card holder to pay
it off. The action plan for this is to pay off small card balances first, then
chip away at the larger ones. Use cash or debit cards for holiday shopping. Avoid using credit cards for major purchases.
Auto loan may also be affected if interest rates go up. Most
loans carry a fixed interest rate but some have a variable rate. If shopping
for a new auto, be sure to know which kind of interest the loan carries. Also note
that auto sales are going well now and dealers don’t want to see another downward
slide. Work with the loan company, your bank or credit until to get the best possible
deal on the loan.
The Enterprises TV show also notes that the consumer’s credit
score plays the most important role in what interest rate they are offered. Stay
on top of yours.
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