Community Choice Credit Union is a great partner with our publishings and we help share their message on our page by getting their blog out to a wider audience. They are driven to be engaged with the communities they serve and financial literacy is a key factor to anyone, especially when it comes to better management of money. This time, it's all about interest rates and ways they have to help you understand how it all works. We're proud to have them as a sponsor of our work!
You might have noticed that we talk a lot about interest rates in Community Conversations. We do so because understanding how interest rates affect your finances will help you make smart choices and help you get the most for your money.
Take the recent .25% rate increase by the Federal Reserve last week. You might initially think that a quarter of a point is no big deal, but with the Fed expected to raise rates six more times this year, now is a good time to get your high-interest debt under control.
Where you’ll feel the rate hike the most is credit cards and Home Equity Lines of Credit.
Credit Cards -
Everyone pays interest. How much you pay depends on your overall credit rating. If you carry a lot of debt on your cards, experts agree that now is a good time to get rid of it.
What you can do
Take advantage of a credit card balance transfer promotion or any card with a lower rate than you’re paying now.
Consider a personal loan to pay off your card.
Refinance the debt into a low-rate auto loan with a cash out refinance.
Talk to a home equity specialist to see what equity is available in your home.If you put a large charge on your card recently, such as a home improvement, next year’s vacation, or college tuition, pay it off now to avoid paying any interest. You’ll be happy you did when you get your next statement.
If you put a large charge on your card recently, such as a home improvement, next year’s vacation, or college tuition, pay it off now to avoid paying any interest. You’ll be happy you did when you get your next statement.
Home Equity Line of Credit
If your line of credit has an adjustable interest rate, there’s a good chance you can refinance that loan, so it has a fixed rate. This will save some money in the long run. If you have a FlexChoice loan from Community Choice, now is a good time to lock in a portion of that loan so you’ll have a fixed rate and term.
New home loans
If you’re looking to buy a home, higher rates mean a higher monthly payment. Here’s what we mean:
In mid-March, the average interest rate for mortgages was around 4.8%. At that rate, borrowing $240,000 for a 30-year fixed rate equals a monthly payment of $1,259.20
At 5.8%, your monthly payment goes up to $1,408.21.
Your options are finding a less expensive house, increasing your down payment, or being prepared for a higher monthly payment.
The impact on auto loans will be minimal because the rates are so low right now. While interest rates won’t affect your bottom line too much, it is important to protect your car. Consider purchasing Guaranteed Asset Protection. It will protect your vehicle in the event of a total loss and in the event your insurance won't cover everything.
Calculate the costs
Wondering how the rate hike will affect your payments? Head over to the calculator page on our website and punch in some numbers.
Give us a call. We can help.
As your credit union, we’re here to help and answer your questions.
Contact our Lending Team
If you want to find out if you can save money by paying off your credit cards with a personal loan, our lending team is here to answer your questions. Don’t forget to ask about our Mastercard as a balance transfer option. You can reach our Lending Contact Center at 877.243.2528 ext. 2200.
Contact our Home Equities Team
If you have a FlexChoice HELOC and want to discuss your refinancing options, give our home equity specialists a call at 877.243.2528 ext. 1976.