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Latest Personal Finance News and Its Impact on Your Financial Plan
Inflation Falls to Its Lowest Level Since 2021
The consumer price index (CPI) saw a modest increase of 2.9% in July, marking the smallest rise since April 2021, as reported by the Bureau of Labor Statistics. On a month-to-month basis, the index rose by 0.2% after a 0.1% decline in June. Additionally, the Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation, reached 2.5% in June, nearing the agency’s 2% target.
Why It Matters
High inflation rates have significantly impacted consumers’ finances. However, experts are optimistic that inflation is stabilizing. A recent Reuters poll of economists revealed that more than half expect the Federal Reserve Open Market Committee to reduce interest rates in its three remaining meetings in 2024. Lower interest rates will make consumer debt less expensive, easing household budget pressures.
What You Can Do
- Learn more about the federal funds rate.
- Look for the next inflation report on September 11.
- Explore ways to combat inflation.
- Find strategies to minimize risks when borrowing money.
Credit Card Debt Hits a New High
According to Q2 2024 data from the Federal Reserve Bank of New York, American consumers now carry a combined $1.14 trillion in credit card debt, a record high and an 11% increase from the previous year. Consumer spending, however, only grew by 5.2%, indicating that high interest rates are driving the increase in debt.
Why It Matters
Credit card debt is one of the most expensive forms of consumer debt. Despite low minimum payment requirements, more borrowers are missing payments to manage other debts. The Federal Reserve’s anticipated interest rate cuts will likely lower credit card rates, but even one missed payment can severely damage your credit score. It’s crucial to stay on top of payments to avoid long-term credit issues.
What You Can Do
- Determine how much credit card debt is too much.
- Learn ways to pay off credit card debt on a tight budget.
- Consider the debt snowball or avalanche methods to eliminate debt.
- Consult a credit counselor for advice on managing debt.
Mortgage Rates Are at Their Lowest Point in Over a Year
Freddie Mac reports that the average interest rate for a 30-year fixed-rate mortgage dropped to 6.46% in mid-August, the lowest since May 2023. A year ago, the average rate exceeded 7%, nearing a 23-year high in October 2023. Freddie Mac expects mortgage rates to continue declining as inflation cools.
Why It Matters
High mortgage interest rates have disrupted the housing market and pushed mortgage payments to record highs. While it’s uncertain if rates will return to the low levels seen in 2020 and 2021, the recent downward trend is a positive sign for borrowers.
What You Can Do
- Learn how to manage high mortgage rates.
- Understand how mortgage interest works.
- Consider whether to buy a house when rates are high.
- Weigh the pros and cons of refinancing a mortgage loan.
Good Credit Can Contribute to a Healthy Financial Plan
Building and maintaining a good credit score can help you navigate financial challenges and save money over time. With Experian’s free credit monitoring service, you can access your FICO® Score and Experian credit report. This information allows you to assess your credit health and identify areas for improvement. Real-time alerts help you spot potential issues and fraud quickly.
For any mortgage service needs, call O1ne Mortgage at 213-732-3074. Our team is here to help you navigate the complexities of the mortgage market and find the best solutions for your financial well-being.
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