Skimm Money: Budget Winter Vacay, Interest Rates, and HOAs

How the news affects your finances.

Interest Rates

ICYMI, the Federal Reserve decided to keep its target interest rate in the range of 5.25% to 5.5%, leaving it at a 22-year high. However, the Fed didn’t rule out the possibility of another hike before the end of the year. The reasons for the pause: Since the Fed’s last meeting, inflation continued cooling, economic activity picked up, and borrowing costs kept rising. The pause could be good news for consumers because, while borrowing costs won’t necessarily go down, they might not increase much either. Here’s how you can take advantage.

Your move:

• Pay off your credit cards ASAP. Credit card interest rates are high right now. While they probably won’t go down because of the pause, they might not go up much either. Read: Now is a great time to aggressively pay down debt. (Reminder: If rates go up, carrying a card balance could get a lot more expensive.)

• Prep for interest rates to stay high. The Fed isn’t raising rates now, but it might not lower them for a while. And it may even hike rates again. Hint: Higher rates usually = $$$ mortgages and car loans. So if you’re thinking of making a big purchase, ask yourself if it’s the right time. Saving up now to make a bigger down payment later might be the smarter money move.

• Up your savings. Between still-high interest rates and high bond yields, borrowing money is expensive right now. On the flip side: Some high-yield savings accounts are paying over 5% interest. If your budget allows, contribute more to your savings. PS: Make sure you have the right account for you.

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