The Fed is expected to raise interest rates today after years of 0 interest for banks who purchase money to lend to you. Pretty good deal, huh? They pay nothing and charge you a lot.
So what does the raise in interest rates mean to you, the average consumer?
An article in CNN Money says:
American savers have struggled for years, earning next to nothing at the bank. Now they could be a step closer to light at the end of that tunnel and earn a little more interest on savings account deposits.
When the Fed raises short-term rates, banks pay customers higher interest on their deposits. But how much higher and how fast they will go up will depend on whether the Fed will keep raising rates.
And while I know little about money it seems higher interest rates is good. Higher interest rates allow consumers to make money on their own money, just like the banks (except on a smaller scale of course) and they discourage reckless borrowing that got us into the Great Recession in the first place.
When you have your money in various interest-bearing accounts you are a lender (not directly of course). I was told when I was just a kid better to be a lender than a borrower. Too bad I did not really get it until so many years later.
Borrowing has its place (if for no other reason than if no one borrowed you would have no one to lend money to), but living totally off of borrowed money is the road to disaster for an individual or a nation.
And of course one trick to investing is to somehow use other people’s money or O P M, as they call it. President-elect Trump could fill you in on that.
So I know some things about money, but almost too little too late.