One common theme we see with many clients, friends and prospects is the lack of knowledge surrounding interest rates. Many Americans have debt, whether that be credit cards, student loans, mortgages or other financial obligations. However, while taking on debt can be beneficial to your credit score and financial health, it can be detrimental for those who are unaware of their interest rate and how to interpret it.
Interestingly enough, a Bankrate survey reported that “Of those who carry a balance, 40% don’t know the interest rate they’re being charged on their primary card”. Not knowing your interest rate and its terms can be very dangerous and potentially very costly to the borrower. When reviewing your financial picture, be sure to pinpoint certain debts that have higher interest rates and make sure you are staying on top of your payments and reducing that liability.
As we’ve been discussing for quite some time now, interest rates are beginning to rise and, according to Federal Reserve’s Jerome Powell’s announcement last week, rates will continue to rise throughout the year. This is a great and timely warning to educate yourself on your interest rates as you prepare financially for 2022 and beyond.
Moving forward, make sure you know your interest rates, especially as you evaluate whether you want to take on more debt and what it may cost you. With pandemic-related economic support the past two years, interest rates may not have been on the forefront of your financial planning list, but now it’s time to take control and see how your current rates and rising rates will impact your portfolio, credit cards, mortgages, and overall financial life.
If you need help analyzing and understanding how your interest rates will affect you, email us at info@shermanwealth.com or schedule a complimentary intro meeting here.
