Suze Orman TwitterSuze Orman FacebookSuze Orman YouTubeSuze Orman LinkedIn
View Blog & News List

Are You Going to Win or Lose From Rising Interest Rates?

April 07, 2017 at 5:00 AM

I want you to understand there is a big shift going on in our economy. I know you are well aware that interest rates have been very low ever since the financial crisis. But that’s changing. The Federal Reserve, which has control of a key interest rate-called the Federal Funds rate-has recently decided that it no longer needs to keep that rate so low because the economy is showing signs of solid strength.

After raising that rate in December, the Fed raised it again in March, and told us that if the economy continues on its current path, it expects two more rate hikes in 2017. As that plays out, you need to understand how higher short-term interest rates will impact your personal finances:

Make More on Your Emergency Fund. I always want you to keep your emergency money safe in a federally insured bank or credit union. For a long time it didn’t really matter much what bank or credit union you chose, as they all basically paid no interest. But some savings accounts now pay 1% or more, and I expect they will continue to rise over time. You should consider moving your emergency fund to an online bank, or credit union that actually pays you some interest. You can research savings deals at

Earn More on Your Cash. Fed policy is also beginning to send the interest rate on certificates of deposit higher. If you have a cash account that isn’t for emergencies, you might want to research CDs offered by online banks. Right now you can earn more than 1.5% for a CD that matures in two years. If you’re worried about your bond funds losing some value as rates rise, locking in a fixed rate on a CD can make sense.

Get Rid of Your Credit Card Debt. Okay, now the bad news of rising rates. The interest rate on unpaid credit card balances is variable. When rates rise, so too does the rate on your credit card. That means the already insanely expensive rates on credit card debt-15% is the norm-are only going to get worse. The best investment you will make in 2017 is to pay down high-rate credit card debt. You can’t tell me you know of another investment that has a guaranteed 15% payoff!

Don’t Panic About Rising Mortgage Rates. Yes, along with short-term rates, we are beginning to see mortgage rates climb as well. But mortgage rates are still pretty great; it’s just that we’ve climbed from a terrific 3.5% rate on a 30-year fixed rate to a still wonderful, but more expansive 4.2% rate. My concern is that you don’t feel pressured to buy right now, because you keep hearing mortgage rates are going to continue to rise. Making the decision to buy a home, especially if it is your first requires careful thought about your overall finances, whether you can afford the additional costs of ownership-property tax, insurance and maintenance-and if you are really ready to own. Don’t let rising mortgage rates rush that decision.

Tag Cloud

shorter payback periodLifestyleIRA contribution gifted moneyprescription tierAARP Social security calculatortake actionRoth 401(k)GiftFinancial Power of Attorneyconsider roth 401(k)FRAlower interest rateARM Cautionclosing feesrising home pricesMoney Market2015 record year car salescredit utilization rateCOLAwaive home inspection bidteens and moneysecure credithigher monthly payment20% down payment avoid fees8 month safety netfinancial fearsunder 18 financial giftemergency fund is it necessaryleave a legacyhome ownershipOverspendingprotect your familypoint cost offset by savingsLong Term Care shoppingExhibitionone annual feeRetirement Savingssetup automatic savings withdrawdebt freehome buying seasonoverspend on dining outheartache19 years cash flow problemPrime Rate Rise 201520 year level term unexpected expense6 month waiting periodengaged in financesCredit Card Interest Ratestretch out haircut appointmentsdon't use allowance as bribedental savings planEasy Life Insurance Minor Children 40% toward financial goalFinancialFinancial Systemdream schoolpay down student loan debtbecome member Suze Orman's Money Warsface your financial fearMass Mutualpercentage men widowed 75-84term life insuranceSuze Ormanmake saving a pleasuremortgage disclosurecredit unionStudent DebtSelfishwomen outlive menBill and Pennysocial security not going brokesidelinedpowerfulhealthy gumsFixed Rate MortgageCredit score15 year mortgagecredit cardadd teenhealthy teethincreased auto insurance premiumraising interest ratesgay marriage ban end Florida Richdon't charge a pennylower premiumAccuQuote.comfinancial aidborrowing plan positivefraudulent returnadvice for college graduatespresident Obamalearn good financial choicesteach importance of helping otherscreate new truth740 credit score8 month emergency funddeath benefit needs for familyzero rate transfer dealseight month living expense juggle multiple financial goalsallowance taskadjust allocations Veterinary Schoolbuy homeUS Tax Codemoney vowsadult childrenbe good exampleget over life insurance phobiabetter termseliminate credit card debtFinancial Advicepaid vacationat worst still pay 75% benefitNewtowncommitrefundsecured cardSuze changed my lifecalculate dependents annual income needsunsubsidized Stafford loanaccelerate dental workbest interest of investorritual scheduleitemized deductionhigher insurance deductibleARMstudentHigh FICO Score = Better Rateretirement planno private loans10 year repayment plan !00% tuition paidForeclosure2015 financial roadmapWashingtonhigh down paymentignore 6 month grace period children's bookBeautymanage student loansplanage appropriate chorecommunity collegeinterest capitalizationsame-sex marriageno interestenjoy saving max benefit coveredderailed planallowancecommissionsteach your child good money habitsburn outsocial securitysavingshealthy aging bill paying prioritiesdangerous money seasonretirment savingsHDHP focus on needsFederal Stafford loanmortgage interest tax deductionpreexisting condition not coveredFundscar loansave Phyllis Shelton expert long-term careCiti Simplicity Card healthy retirement weightpaying for collegesocial security never insolventWarner Bros Television GroupETF'sinterest on student loansfinancial independencelong-term care premiumsworkaholicpeace of mindNew american Dream property taxFICO at least 720real estate marketbreakdown projected monthly housing costdeath benefit 20 to 25 times annual incomeInvest for savings growthstaycationLTC shoppingbad retirement planningrefinancereduce interest rateemployer offered life insurance3 bucket approachhome insurancePay Off Debt Before Retirementschool highest possible benefitschedule vacationHDHP's are good for youwould you decline a bonuscnbc alarm clockgift up to 14,0008 RulesHeartmoney-aware childcontribution loan no longer than 36monthswives should be involved in retirementapproved medical 100% tax-freeLong Term Care premiumsdepreciating asset no fee transferstudent loan repayment plandon't derail retirement savingspush yourself to save more for retirementlower ratehigh FICO scoreForbesMoneyfiduciary15-year refinance dealprovider of financial supportraising mortgage rates Sandy Hook Elementary SchoolLegal GuardianInflation BenefitVital Documentsnot gender specific home related tax break bonus big results is it necessary?mortgageget health insurancejanuary billscostly legal 3 step financial road mapEmployer Matched Contributiongrandchild summer job IRA contributionStaffords this year have a fixed 6.8% interest rateinsurance mistakeThe Suze Orman ShowSandy Hook Promisestore credit cardsdon't ignore open enrollmentStudent Debt Crisispaid in fullfinancial goal phraseAARPshort term goal affordable premiumdon't extend mortgage InterestMost Influential Celebrities ListBaby Boomersfinancial argumentsuniversal college accessannual cost of living adjustmentMoney-SavingAmericans don't use all paid vacation timelong term goalFinancial Solutions For Youloan big picture rolloverpremiumresponsiblereduce monthly paymentgift not loancar buying mistakesone credit cardRevocable Living TrustForbes Top 10student loan repaymentdoctors in networklive below your meansearn more on savingsFinancial Gift Cliffultimate compounding giftrequire chore in exchange for allowancevalue moneyconfident of solutionspeak new goalsavings pleasurefinancial concernincrease emergency savings30 year mortgage switch to spouse coverageCD'sresponsible with moneycontribute household expenses keep a scheduleholiday spendingmultiple lenderssuitabletaxesfile asapdon't defer interest paymentslife insurancepay down car loanlong-term care closing disclosurecredit reportno apology50 over 50GraceYoung Adult College of Veterinary Medicinedental insurance initial tax break HDHP/HSAopen enrollment review Wall Streetretirementfederal student loan deferment tax ID theftloan necessityno private loanSatisfyingGiftsback door Roth IRAlow credit scoreprotect dependent charges on credit cardidentity theftLoverepay student loanscan you afford ithome buying mistakesDeath Benefit20 to 25 times annual incomeroth iraincrease retirement savingsthree year car loanpay off debtshop online guaranteed level term policyonly offered while employed Cory Bookercut monthly cable billHoliday Shoppingsave moneyknow before you owewomen longer life spanAmy LacyetConventional loan PMIdebit cardearn allowanceterm insurancealways use all paid time offno negativityPrime Rate Increasenegotiate points with bank or sellerhome loan credit score below 740 max employer matched 401(k) contributioncut monthly cellular bill3% debt transferred high credit score discountHoliday Seasoncompare provider pricingoverspend on giftsbe true to yourselfGoodbyepay 100% cashbuy home you can affordrequired disclosurewomen live longerdoctor no longer in networklower mortgage interestautomate student loan paymentsdear suzechildren under 18Influential Celebritybetter loan ratesFHA loan feeslow-cost index mutual fundRetirement IncomeFinancial Educatorage appropriate goalsLTCSuze Orman spouse Kathy Travisfamily save at least $100 monthlybest loan deal full retirement agekids schedule paymentsstudent loan repayment estimatorHigh Credit ScoreBankvalentines dayFinancial Awarenessverify wellness screening and programsSave Us Moneyletter to suzebetter loan dealsEric Dodge Mothergrandparent IRA contribution back-to-school budgetmortgage brokerclosing costs 2% of loanhealthy retirement blood pressurenear historic lowsbe kind to yourselfGay Couplestitle insurancelife insurance name trust as beneficiaryemergency fund savingsbuying car 2016small changes iffy incomeRevocable Truststandard deduction dental discount planfour steps to retirement savings Final Goodbyespecial saving accountretain separate credit cardsis it kind?referrals 3 savings buckets verify retirement plan with HR or plan sponsorDurable Power of Attorney for Health Careworst financial mistakeTelepicturesdangerous retirement planFree Debt Eliminatoremotional stakesreduce withholdingescrowpercentage of women widowed 75-84co-sign University of Illinoispublic service loan forgiveness programrent vs buyinsurancefile taxes quicklyFederal Funds RateChanging Livescomparison shoppinghealthy yousame sex marriage band end Floridawomen long term carereal estate mistakes4 Must Have Documents CommencementHDHP'sfinancing car student loan debtis it true? Post-Divorceborrow each year, capitalization is going to pile up tax refund fraud20% equitymax employee matchexercise reguarlyspring summer don't blow tax refundCPI-Wcouple financespay high rate off firstbuying a carraise deductiblesdon't cover cosmetic dentistryretirement accountsanticipated salaryHDHP's are not badno splurge Must Have Documentsstandard rateStock Investmentsno retirement funds for down paymentget the most out of social security overcome financial fearslow mileage discountno sneaking in feesFICO credit score credit card mortgagenon conventional routeno late fee 2016 adjust estimated taxprofessional advisorteensnot enough life insurancepay credit debt ASAPreplace permanent life insurance with termalternative FICO scoreprotect and provide for minor child best interest ratesmonthly dental insurance premiumpublic service career student loan repayment 401(k) Contributionsmeet monthly community banksuccessloan is giftdon't do five year car loanBankruptcyCNBCpay more than minimummonthly benefit low down paymentSchool of Social Work2017 Taxesquick closingdon't spend Financial Awareness Video Festival2016 adjust withholdingcollege graduateAuto Savings physical healthSpendingLong Term Care Insurance purely financial standpointSuze is my biggest mentortraditional vs roth 401(k)no waiting periodyours, mine & oursstay positivelowest cost fund optionsocial work401KHow To Build CreditPersonal Financemobile applong term careTeachHSA tax savingsAlarm Clockincentives for health care wellness screeningonly refinance if it paysincrease retirement contribution rateprotect loved ones budgetraise your deductibleLTCi ASAPtelevision hostcostly insurance mistakeMortgage Credit Availability Indexwrite new goalhome budget after tax costEmergency Savingscredit managementlousy investmentautomatic paymentautomatic withdraw to savings no life insurance financially irresponsibleStudent LoanNew York Lifelower overall drug costAshley SpringerCombo Insurance ProductsSelectQuote.compermanent life insuranceavoid burn outsummer job match income affordabilityraise insurance deductiblestrained relationshipinsurance yearly reviewhousing marketswitch to roth 401(k)origination feesdo you need life insurancecollege studentCommunication Skills employer funding HSAdo not pay allowance for good behaviorbad decisionsbuy down Financial CliffCredit Card Rate IncreaseFICO ScoreCivil RightsSuze approvedGay Rightsgraduationbalance transfer too expensive schoolcompare monthly expensesdon't buy wantsOne Wallet At A Timenew carAdequate Auto and Home Insurancemental healthno tax on withdrawlscar leasinglet them have 50% controlcost of capitalization calculator10% donate to charityfocus on new truth WillPBS Specialoverspend on nights outget credit cardmarriage inequalityUrbana-ChampaignFiscal Responsibilityidentity fraudHolidaySuze Orman Scholarshiploved ones dependent on incomeJose RodriguezMarlo Thomashigh deductible health care plan20% down paymentUniversity of Floridakid borrow firstmaintain standard of livingconfidentSwap Older Annuities or Life Insurance marriage financial responsibilityFederal ReserveFederal PLUS loangift grandchild IRA contributionInfluentialshome buying budgetpay interest while in schoolhigh premiumsdebt

View Blog & News List
People First. Then Money. Then Things.
Connect with me on Facebook Connect with me on YouTube Connect with me on Twitter
© 2017 Suze Orman Media Inc. All rights reserved.
 |  Search  |  Sitemap  |  Privacy  |  Terms
Sign Up For E-mail Offers
Open Panel
Close Panel