Interest Rate Check-in: Can You Guess the Going Rates?

Interest rates go up and down depending on how the economy’s doing. When rates are high, saving money becomes more rewarding. When they’re low, borrowing (like using credit cards or taking out loans) gets cheaper, so people tend to spend more. 

That’s why it’s always smart to take a quick look at where your money is. Is it sitting in the right account? Could it be working harder for you somewhere else?  Keeping tabs on your finances doesn’t have to be complicated. Staying in the loop helps you make confident choices and get the most out of your money.

How Interest Works (And How It Can Work For You)

Think of interest as a fee you pay when you borrow money – or a reward you earn when you save it.

Let’s say you owe $3,000 on a credit card with a 10% interest rate. That means the bank charges you about $25 a month just for borrowing that money. If your minimum payment is $60, only $35 goes toward shrinking your debt – the rest just covers the interest.  

Now imagine you keep spending $35 on the card each month. You’re basically stuck in a loop: every $35 you spend ends up costing you $60 once interest is added. Sneaky, right?

Here’s the good news: interest can work for you, too.  Say you put $500 into a savings account. After a month, you earn a little interest – maybe $1. Next month, you earn interest on $501. That’s called compound interest, and it keeps growing.  

If you keep adding $500 every month for 5 years, you’ll have saved $30,000. But with even a modest interest rate (like 2%), your total balance would be around $31,500. That extra $1,500? It’s money your savings earned on its own – no extra work from you.

Curious about the current rates and how they affect your money?  Take this quick quiz and see what you already know!

So how do you turn all this number talk into something useful?

Simple: knowing current interest rates gives you the power to make smarter money moves.

Here’s what that could look like:

• If you’re saving, look for a high-yield account that fits your needs – just make sure you meet any minimum balance requirements.
• If you’re borrowing, try not to carry a balance longer than you have to. Make a plan to pay it off, and stick to the plan.
• Got high-interest debt? Consider moving it to a lower-rate option, but continue to focus on paying it down.

Lastly, set a reminder to check out interest rates every few months. You don’t want to open new accounts all the time, but staying informed helps you spot better options when they come up.  Ready to see what rates are out there?  Set aside some time this week to look at your current rates and some comparisons!