Often consumers will worry about increasing interest rates, but are higher rates really better for your savings account?
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Gobankingrates asked Chatgpt what is the effect of increasing interest rates on the money you put in your savings, and here is what he said.
Also see how to calculate interest in a savings account.
According to Chatgpt, if your money is in high performance savings accounts, deposit certificates (CD) or monetary market accounts, your savings will increase.
As the federal interest rate increases, banks increase their interest rates, they pay customers to deposit species. You will earn more money in addition to your savings money without having to do anything. Currently, a high -efficiency savings account can bring you more than 4%, which is a good return and could even increase as federal rates increase. At 4%, if you save $ 10,000 in one year, you will earn an additional $ 400.
Find out: 3 best ways to prioritize your savings goals
If you wear credit card debt, you may see interest rates or minimum payments required to increase. This is why it is important to prioritize the reimbursement of this debt as quickly as possible, so you are not stuck by paying an ever increasing amount.
It may be good to reimburse the credit card with the highest interest rate first, then go in decreasing order from there.
The good thing to have money in savings is that it is a sure thing. If you do not spend what’s in the account, he will always be there in a few months. With interest, you will probably have a little more than you started. On the other hand, there are more risks of investing money in stocks.
Although investment is still a good long -term bet, when interest rates are higher, things like high -efficiency savings accounts can be another attractive option.
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This article originally appeared on gobankingrates.com: I asked Chatgpt how the increase in interest rates affects my savings
