Now that the Federal Reserve has raised interest rates for the third time since the presidential election, many are starting to wonder what these actions may mean for their financial future.
Kent L. Lugrand, President/CEO
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Now that the Federal Reserve has raised interest rates for the third time since the presidential election, many are starting to wonder what these actions may mean for their financial future. Let’s examine a few options from an economic, lending, and savings perspective. According to the Federal Reserve’s Statement released after the announcement, “economic activity [and] job gains have moderated but have been solid, on average, since the beginning of the year, and the unemployment rate has declined.” Furthermore, “The Committee expects that economic conditions will evolve in a manner that will warrant gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run.” In other words, interest rates are expected to continue to slowly increase over time, but the pace will continue to be driven by economic data. So now that you know the drivers, what decisions are best for you?
If economic activity and loan rates are going to increase, then the more affordable (cheaper) choice is to borrow for what you need to purchase today. Buying that home, refinancing your mortgage, using home equity to fund that special purpose, buying the auto you need, or using “fixed-term” unsecured borrowing to replace your credit card debt would be really good option in this environment. ITCU is ready to help you achieve all your borrowing needs.
For savers looking for ways to increase the rate received on your deposits without necessarily “locking in” to long-term maturities to get a higher yield, adjustable rate products may be a way for you to “have your cake and eat it, too”. ITCU launched new “Bump Up” Certificates to help you earn the highest rate possible today while providing you an option to increase your rate should interest rates rise in the future.
We recognize that decisions can be difficult during economic expansions, but having someone to “talk it through” with is half the battle. Give us a call or drop by and speak to one of our Personal Financial Assistants about your options. We’ll do our best to work with you and your specific situation, because we work for you and your financial well-being.