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How higher for longer foils consumers

In two key areas that most impact consumers, higher for longer might as well translate to higher financial stress and longer-term anxiety.

The housing market may offer the most bracing example of eroded consumer optimism. Those who landed historically low mortgage rates in 2020 and 2021 of below 3% truly hit the jackpot and don’t want to sell their homes. Thirty-year mortgages are now hovering above 7%. This has exacerbated the housing crisis, leaving many would-be buyers on the sidelines.

Food prices have persisted since the rises during the pandemic, something that has caught the attention of the federal government. During a speech in January, President Joe Biden blasted corporations for practices such as price gouging and “greedflation.”

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Millions of Americans are struggling to crawl out of debt in the face of record-high interest rates. A personal loan offers lower interest rates and fixed payments, making it a smart choice to consolidate high-interest credit card debt. It helps save money, simplifies payments, and accelerates debt payoff. Credible is a free online service that shows you the best lending options to pay off your credit card debt fast — and save a ton in interest.

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Three smart money moves

Consumers may not set prices, but they do have control over where their money goes. Here are three smart money moves you can make to tackle elevated rates.

1. Get a grip on your credit cards

If you think interest rates are bad, then look at the typical credit card bill. According to the Consumer Financial Protection Bureau, the average APR on a credit card was 22.8% in late 2023 — almost double the percentage in 2013 — and the highest on record. Again: That’s not the high but the average.

The good news is that credit card companies want your business, especially if you have a high credit score. Many offer balance transfers, some at 0%, that last a year or more. Typically, you’ll pay a small percentage fee upfront based on your total balance, but, even so, you have the opportunity to pay off your balance much faster.

2. Invest

Inflation currently clocks in at an annual rate of 3.4%. But the average annual return of the S&P 500 since 1957 has been 10.36%, according to the Official Data Foundation. Assuming you put in $100 into an S&P 500 index fund a decade ago, you’d have around $334.21 today, assuming you reinvested all dividends. The return equals 12.39% per year — and in this case, higher for longer would be very good indeed.

3. Shop around on everything

If you’re used to shopping for everything at a place like Whole Foods, now’s the time to consider working in a discount store run — or as the late billionaire Charlie Munger suggested, clipping coupons.

For example, if you think you’re paying too much for car insurance — especially with rates up about 22% year over year, according to the Bureau of Labor Statistics — then take some time to gather quotes and calculate the best cost savings for equivalent coverage.

Personal loans are not created equal, either. Be sure to compare rates and pick a term that cuts those rates even further.

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There’s no reason not to at least try this free service. Check out BestMoney today, and take a turn in the right direction.

Lou Carlozo Freelance writer

Lou Carlozo is a freelance contributor to Moneywise.

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