The Fed just paused interest rates again. Here are 3 affordable ways you can still borrow money.
Summary
The Federal Reserve has kept interest rates steady for the fourth time in a row, but inflation and rising energy costs mean rate increases are possible later this year. Borrowing money remains costly for many, but some options like home equity lines of credit and home equity loans offer more affordable ways to borrow.Key Facts
- The Fed’s benchmark interest rate is currently between 3.5% and 3.75%.
- Inflation is over 4%, and energy prices are increasing.
- There is a chance the Fed will raise rates before the end of the year.
- Credit card interest rates are very high, around 21% or more.
- Home equity lines of credit (HELOCs) have average rates just above 7%, making them cheaper than credit cards.
- HELOCs allow borrowing as needed and charge interest only on the amount used.
- Home equity loans give a fixed lump sum with fixed payments, typically around 7% interest, which helps protect against rising rates.
- Home equity loans offer less flexibility than HELOCs because the full loan amount is given at once and repayment starts immediately.
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