Rising Interest Rates, Savings, and Debt

Presented by Marc Aarons

I’m reaching out today given the stark financial situation many Americans find themselves in, as they grapple with the Federal Reserve’s historic rate hike campaign and the compounding effects of just-recently cooling inflation.

If you are among those facing record-high credit card debt and dwindling emergency savings, I want you to know you’re far from alone in this, and there are some helpful strategies you may not have considered. Here are three:

• Ask for a lower credit card rate. If you carry a balance on your credit card, call your bank and ask for a reduced rate or annual fee. This past year, 76% of people who asked for a lower interest rate got one. It’s not guaranteed, but the cost of asking is $0.
• Weigh whether debt consolidation loans or balance transfers are right for you. If you have a number of high-interest credit cards or other loans, you may be able to consolidate this debt at a lower interest rate, either as part of a balance transfer for credit cards or through a debt consolidation loan. Often, these lower interest rate offers are limited to a particular period of time, after which interest rates increase. So, you’ll need to seriously consider whether you can pay off the debt in that stipulated period of time. Keep in mind you’ll likely need a higher credit score to qualify for debt consolidation.
• Consider high-yield savings accounts. As you go through your budget, if you have extra cash to set aside, consider a high-yield savings account to get a better return on those funds. This is a good option for those without strong emergency savings who want to be able to access their savings relatively quickly. Unlike with CDs or other investments, account holders are legally allowed to withdraw money from high-yield savings accounts without any federal fees, though more than six withdrawals in a month could spur bank fees.

I hope these tips are helpful. As always, if I can answer questions or otherwise be of assistance, do not hesitate to reach out. I am always here as a resource for you and your family.

Marc Aarons may be reached at 714-887-8000 or marc@ocmoneymanagers.com

www.ocmoneymanagers.com

This communication is from Money Managers, Inc.; a Securities and Exchange Commission registered investment advisor.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any securities, and past performance is not indicative of future results.  Investments involve risk and are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed here.