On this episode of Financially Naked: Stories from The Financial Gym, three Certified Financial Trainers, Mike, Kadri, & Garrett are here to gymplain interest rates. Interest rates directly affect our everyday lives, how we spend, how we save, and how we invest. Knowing how interest impacts your finances can be a powerful tool for planning ahead.
Podcast Notes
- According to Investopedia, “The interest rate is the amount a lender charges a borrower and is a percentage of the principal—the amount loaned.”
- “An interest rate can also apply to the amount earned at a bank or credit union from a savings account."
- Interest rates are set by the Federal Reserve. It’s a lever they can pull to help guide the economy in the direction they want it to go.
- In 2020, we saw interest rates lowered. Now we’re seeing the pendulum swing the other way. The goal right now is to slow down inflation.
- Interest rates affect the economy and our everyday lives.
- There are different types of interest rates, fixed and adjustable. Knowing what kind of debt you’re taking on is important.
- An adjustable interest rate means it will fluctuate. With a mortgage, it will be on a schedule.
- Unsecured debt, like credit cards often have adjustable interest rates. If you pay in full every month, this doesn’t affect you. If you carry a balance, these rates are important.
- Interest is not just for debt, it applies to savings accounts as well.
- High Yield Savings Account rates have been steadily increasing over the last few months.
- Recent shifts in client behavior:
- Some clients who have been procrastinating have finally been opening HYSA’s and taking advantage of the great interest rates.
- Home renovations have slowed down, leading to less refinancing.
- There has been a slowdown in folks wanting to purchase a home.
- If you’re not sure what your interest rate is, that information is on your credit card statement, on one of the last pages.
- Congress controls the purse strings and the decisions we make as a country directly affect our money and our day-to-day lives.
- At the end of the day, financial literacy is key. The most important thing you can do is look at your assets and what’s available to you. Understand what products and accounts you’re using and use them to accomplish your financial goals.
Meet The Trainers
Meet Kadri Augustin, Level 3 Certified Financial Trainer
Meet Mike Poulin, Level 2 Certified Financial Trainer
Meet Garrett Faulconer, Level 2 Certified Financial Trainer
