How to thrive in an uncertain economy

This year alone, the U.S. Federal Reserve (AKA “The Fed”) has raised rates by several percentage points and may raise rates even more. 

They’re doing this to control inflation and stabilize a shaky economy still struggling to find its way after being pummeled by the COVID-19 pandemic and ongoing supply chain issues. 

That’s good, right? 

Yes, but rising interest rates have a ripple effect that hits our personal budgets in a variety of ways.  

The main way higher interest rates affect you and me is that it makes borrowing money more expensive. 

This means we will likely pay more when we get a mortgage to pay for a house or take out an auto loan to buy a new car. 

Another thing about rising rates is that the stock market usually doesn't like them. That’s why, if you’ve checked your 401K or other stock market investments this year, you probably wish you hadn’t. 

When the stock market tanks, of course, job cuts often follow, which can further impact the economy and strike recession fears in the hearts of many.   

When is the economy in a recession? Technically a recession is official when gross domestic product, or the total value of a country’s goods and services, goes down for two quarters in a row.  

The good news is rising rates aren’t all bad. Especially if you know how to make the most of them. 

It helps in a shaky economy to have the stability of a credit union behind you. During challenging economic times, there is no better ally than a not-for-profit financial co-op to see you through.

 

Below are four ways credit unions can help you when interest rates go up and the stock market goes down. 

Right now, the national average interest rate on savings accounts falls between 0.13% and 0.16% APY*.¹ 

But many financial institutions are moving their savings rates up as the Fed bumps rates higher.  

Thanks to the power of compound interest (something Albert Einstein called the “eighth wonder of the world,”) you'll be able to watch your money grow over time without having to do anything but simply set it aside in an insured account.  

Now is the best time to do this as rates go up. 

With many high-risk investments experiencing big swings this year, there’s no safer place to keep your money until the market bottoms out than a federally insured bank or credit union account.  

At CAFCU, our accounts are backed by the National Credit Union Administration (NCUA), an independent agency of the U.S. government that regulates, charters, and supervises federal credit unions. Through their National Credit Union Share Insurance Fund (NCUSIF), they provide all members of federally insured credit unions like CAFCU with up to $250,000 in coverage for each single ownership account, including regular shares, checking, money market accounts, and share certificates. This is similar to the insurance offered by banks through the Federal Deposit Insurance Corporation, better known as FDIC. 

Compare NCUA and FDIC insurance here. 

In addition to being insured, savings accounts have a guaranteed rate of return. With higher risk investments like stocks and bonds, nothing is guaranteed. 

Even in a rising-rate environment, most of us still need to replace cars, move to new homes, and handle major life expenses.  

Thankfully, not-for-profit financial cooperatives like CAFCU offer low-rate loans to help our members pay less on interest for the auto loans, mortgages, personal loans, and credit cards they need.  

In addition to offering lower-than-average interest rates on our lending products, we also periodically offer special loan discounts. Make sure to watch your email to catch one of our upcoming rate discounts.  

(If you aren’t subscribed yet to our emails, you can do so here). 

The negative financial news we’ve been hearing all year can be stressful. Never mind taking a peek at any long-term investments and finding they've dropped. 

Add to this any struggles with debt and suddenly personal money management might make you want to throw in the towel on adulting. 

Thankfully, you have options! 

Financial co-ops like CAFCU have teams that are trained to help identify ways our members can save money so they can make the most of whatever economic situation they find themselves in. 

In addition, at CAFCU we offer a wealth of financial resources to our members, from free webinars and blog posts like this one to free one-on-one financial coaching. Learn more about all we have to offer.  

Want to talk to a real person to guide you through? You can reach out to our Member Center with questions about your accounts and how you can make the most of them. Here are the many ways you can contact us.

Even during uncertain economic times, you can pull through and even do well when you make informed choices and get the help you need. At CAFCU, our goal is to be that help so we can empower your financial success through good times and bad.