Tag: interest rates

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Financial Loans

Interest Rate Hikes May Come Very Soon

Interest Rate Hikes May Come Sooner

Interest rates, oh interest rates, how we wish you were low forever. But this is not the reality of how interest rates work. And soon, interest rate hikes may grow higher and higher.

During the start of the pandemic, rates were lowered to help grow the economy. If interest rates are low, more people are likely the make purchases using their credit cards or buy homes.

Now that inflation has pushed our economy to the brink, it is expected that interest rates will grow as well. Inflation is at an all-time high, growing more in one year than the previous 30.

It is predicted that interest rates will be raised 3 times during the year 2022. Some people predict that as soon as March hits, rates will begin to climb. They feel the economy has recovered enough that it is time to begin the rate hike.

What Causes Interest Rate Increases?

Interest rate increases are caused by supply and demand. The more people need or want credit, the higher the rates are. The fewer people need or want credit, the lower the rates are.

With the distribution of stimulus checks and government aid during the beginning of the pandemic, people didn’t need as much credit. They were more mindful of their purchases and had the extra cash to buy their necessities.

Now that the government has stopped funding its people, they are back to a new sense of normalcy. Applying for credit and such as they would have before. This means it is time for rate hikes.

Is Inflation A Threat To Our Economy?

Inflation has risen 7% during 2021, and there are no signs that it is stopping anytime soon. Most experts claim that prices will not go back to pre-pandemic levels, and this is our new normal.

Some experts believe that prices will continue to climb well into the year 2024, and with current rates of inflation, that could be devastating for some communities.

Because of the high inflation rates, the cost of rent and other goods are through the roof. These prices are making the average person look for other means to have sustainable living.

What Happens If Interest Rates Increase Too Fast?

If they increase too fast, it could impact the global economy. Many believe it is risky and could be a better solution to keep them low for a while.

Central banks set a standard for rates that are used for loans and debts. When rates skyrocket, fewer people will meet the demand of purchases. Higher interest rates mean a higher cost of goods, and when an economy is already struggling it can be hard to keep up.

Keep In Mind

With high levels of inflation, comes various unforeseen financial drawbacks. We must increase interest rates in order to keep the supply chain satisfied. When we keep rates low for a prolonged amount of time it can hinder the growth of the economy.

Categories
Credit Financial

Credit Cards: Best Low-Interest Cards of 2021

credit cards with low interest rates

When you qualify for a low credit card interest rate, you qualify to reduce the overall cost of your debt over a longer period. When you borrow money or use credit, you usually have to pay a premium on that borrowed money in the form of interest.

Citi Diamond Preferred Card

This is a card with a 0% introductory rate, but the great part about the introductory rate is that it lasts for a year and a half. A full 18 months of zero interest can be a goldmine if you have some debt to catch up on. Once the intro period is over the interest rate will revert to the rate stated in the terms, generally a 14%-27% variable APR. To qualify for this card the applicant will need excellent credit and a FICO of between 720 and 850.

Discover Cash Back

Discover has reinvented itself in recent years as a very competitive card company, and this card is another reason why. The $0 annual fee and 0% APR intro period for a robust 14 months make this an attractive card that you do not need to have nearly-perfect credit to qualify for. They will accept applicants with a credit score as low as 690 with improving terms for scores up to 850.

Chase Freedom Unlimited

The Chase Freedom Unlimited card is another great card with a 0% APR for 15 months on purchases. It also has an entry point for consumers with credit scores from 850 down to just 690, so if you have faced some credit challenges this card might be a great match to get caught up.

In the first 3 months, spending $500 on purchases earns a $200 bonus, a legitimately nice return. The customer also earns 5% on travel purchases, 3% at restaurants, other dining, and drugstores. There is no minimum to redeem the cashback, like on some other cards.

Blue Cash Everyday Card

For a card with a great 0% APR intro period, and nice cash back benefits beyond that, the Blue Cash Everyday card is an enticing option. The intro period is a leisurely 15 months, and the APR after that can range from 13.99% up to 23.99%.

If you spend $1,000 in the first 3 months, you get $200 back. Additionally, you 3% back at grocery stores, up to $6,000 in a year, 2% back from gas stations and select department stores, and 1% back on other purchases.

U.S. Bank Visa Platinum Card

If you are one of the few who can qualify for the U.S. Bank Visa Platinum card, you should certainly consider having one. They provide a 0% intro APR for a massive 20 months, and a variable APR of between 14.49% and 24.49% after that. You’ll need a credit score of 720-850 to get in the door. Additionally, paying with the card provides up to $600 to protect against cellphone damage and theft.

Categories
Credit Financial

How to Reduce the Interest on Your Credit Cards

Heres How to Reduce the Interest on Your Credit Cards

Are you paying a lot of credit card interest? Do you even know how much interest you are paying each month or year? Some credit card users receive quite a shock when they finally see those totals. Consumers spend over $1,000/year on just interest each year.

So what can you do about this? Can you reduce the interest on your credit cards? Yes, you can.

3 Ways to Reduce Credit Card Interest

1.     Pay off your balance in full each month.

By paying your entire balance each month, you avoid interest entirely.  This is easier said than done.  If your goal is to pay zero interest, you will need to make a plan that includes budgeting all credit card purchases.  Even if many find it difficult, this is achievable.

2.     Ask your Credit Card Company for a rate reduction.

Is this even a thing that credit card companies are willing to do? Of course, it is. 

Credit card companies like to let consumers think that some higher power decides interest rates.  They want you to believe there is nothing anyone can do to change your number. Not questioning your interest rate always works out in their favor because it means your likely to pay more money directly to them.

Your credit card company’s primary focus is to keep you as a customer and paying interest as long as possible.  If they think you might leave because of a higher interest rate, they can be surprisingly willing to discuss reducing it. 

How to ask:

  • First, consider what your goal is.  Just trying to save money? Have a unique situation that’s making you do this? Different goals might require you to take different approaches.
  • Next, gather some potential offers or options. Can you get approved for a 0% balance transfer? Is there any other way that taking your business to someone else might help achieve your goal?
  • Finally, call customer service.  Let them know about your options.  Tell them why you are considering making changes.  Say you would rather not go, but that they need to give you a reason to stay.

3.     Transfer your balance to another card.

A surprising number of credit cards offer 0% APR as an introductory offer for new customers.  Transferring all (or some) of your balance to one of these accounts could give you just the time you need to pay down that balance with no interest adding to it.  Just be fully aware that you will end up right back where you started if you fail to pay down the balance.

Of course, you can be stuck with your current interest payments.  Occasionally the circumstances just don’t make that rate reduction possible. Those occasions are much rarer than most people realize, and even when they do occur, it is only temporary.  By simply being aware of the options you have as a consumer, you can control how much it costs you to use credit cards.