Greater Nevada Credit Union Shows How You Can Make the Best of Rising Interest Rates
Saving Rates Rise with Interest Rates
Rising interest rates make using your credit card and taking out a mortgage more expensive. However, there is a silver lining. You can use higher interest rates to boost your savings.
Tom Wambaugh, vice president of member services here at Greater Nevada Credit Union, wrote about why “the Fed Rate” changes and how it affects the economy. Though financial institutions don’t have to follow the Fed Rate by law, they often respond collectively to the actions of other banks when it does change.
Banks change rates when they lend and “borrow” money from their customers. The interest you receive from certain savings accounts, such as a Share Certificate (CD) from GNCU, rise along with the Fed Rate.
CDs are also very safe investments, and rates lock in when you create the account, guaranteeing a return on investment when they mature.
“If you have enough savings to cover several months’ worth of expenses and additional cash you don’t need immediately, a smart investment might be a low-risk share certificate account,” Tom wrote. “But don’t forget certificates are usually subject to penalties if you withdraw before the maturity date.”