Low Interest Rates Might Help Chicago Homebuyers, But Could Hurt Others
By now you've probably already heard that the Fed plans to plunge $600 billion into U.S. banks. But what does that mean for the average American?
That depends on where you're at financially, say Chicago bankruptcy attorneys. By printing more money, the Fed hopes to lower already-low interest rates. And as we all know, low interest rates are good for borrowers, like those of us taking out a home loan, but bad for savers - like the millions of Americans saving up to pay off debt or weather a rough economy.
So what to do if you're more worried about paying your mortgage than applying for a new one? Your best bet may be to focus your energy on paying down as much debt as possible.
While it's essential to have some savings stockpiled in case of an emergency - whether it be a layoff, medical issue or possibility of foreclosure - you want to put the majority of your money where it can do the most good. When rates are up, that might mean having a good chunk of your money in savings accounts, CDs and money markets. They're more stable than the stock market, and, depending on the account, can often be conveniently liquid.
But if you're getting just 1% return on your savings, and still paying 20% in annual interest on credit card debt, you're taking multiple steps back for every one step forward. Imagine how much you could save if you eliminated what essentially amounts to a 20% tax on your past purchases! When rates are low, you can often save more money by lowering debt than by investing.
Of course, there's still the age-old question: When you're struggling to pay the bills as it is, how do you afford to pay down debt? At DebtStoppers, we may have the answer: bankruptcy. By filing for Chapter 13 bankruptcy, you can gain protection for your assets - house included - and an affordable plan for lowering your balance. And thanks to our Chicago bankruptcy attorneys, you can gain something else - free professional financial help when you sign up for a personal debt analysis.