Be Interest Rate Wise
Interest rates have become a highly visible issue with news stories about rate changes appearing almost every day. Much of the press coverage concerns the Federal Reserve and its chairman, Ben Bernanke, who became chairman when Allan Greenspan retired in early 2006.
The Federal Open Market Committee (Fed) monitors the economy and makes changes to the key overnight loan rate that influences interest rates throughout the economy. By adjusting this rate, the Fed tries to keep inflation under control and stimulate long-term economic growth. The Fed lowered this rate several times beginning in 2001 to stimulate the economy and provide liquidity in the financial markets. In the summer of 2004, the Fed started gradually raising the rate as the economy strengthened and to keep inflation in check. That policy continued to be employed through 2005 and early 2006. At the August 2006 Fed meeting, they decided to not raise the rate after 17 straight increases. The rate remained constant through the summer of 2007. In the fall of 2007, the Fed started reducing rates at a rapid pace to a three-year low.
Interest rates also play a major role in our economy and in our daily lives, especially when it comes to borrowing.
Develop a smart borrowing strategy
The smart use of credit can be an important part of your personal and business financial strategies.
- Use common sense. Never borrow more than you can repay. Prioritize your borrowing based on long-term value. Reserve some borrowing capacity for emergencies.
- Consider all the terms. Review all the terms and conditions before you sign any credit application.
- Get help if you need it. If your borrowing gets out of control, take immediate steps to solve the problem. Contact lenders to work out a repayment plan. Seek the help of a qualified credit counselor.
Today’s low rates
Interest rates are at historically low levels. Accurate predictions of future interest rate movements are almost impossible to make. To take advantage of BB&T’s current low rates, here are two ideas to consider:
Mortgage and home equity loans
Mortgage rates are low, as are home equity rates. Now is a great time to get a mortgage on a new home, refinance an existing mortgage, or use your home’s equity to make home improvements, pay for education expenses, or consolidate debt. (All come with potential tax advantages). BB&T has mortgage and home equity programs to meet almost any need.
All credit cards are not alike. Differences in fees, interest rates, and associated benefits for using the card should all be considered when choosing the one that makes most sense for you. If you carry over balances and pay interest on those balances, having a card that charges lower interest rates can mean the difference of hundreds or thousands of dollars each year. With an average balance of $5,000, the difference between an 8 percent and an 18 percent rate means $500. You owe it to yourself to compare.