CINCINNATI — Rising mortgage rates are getting a lot of attention these days.
But with the Federal Reserve raising rates to fend off inflation, higher rates are taking a toll even if you are not buying a home.
Have a revolving credit card balance? Thinking of buying a new or used car? Or you are hoping to take out a college loan soon? Get ready to pay more to pay that money back.
Bankrate.com says:
- Credit card rates are at a two year high, or 16 percent on average.
- 5 year car loans are now over 6 percent.
- 20 year home equity loans are at 6 percent.
- 30 year mortgages are now over 5 percent (and as high as 5 and a half percent in some areas), which can add $500 a month to a 350,000 home.
- Federal student loans are now 3.73 percent, up from 2.75 percent in 2020.
How a poor credit score will make things even worse
But from the doesn't that stink file, how a poor credit score can really hurt you these days,
Let's say you are buying a car. Your rate can range from 4 percent with an excellent credit score -- above 600 -- all the way to be 17 percent if you have poor credit.
And a 17 percent car loan will add thousands of dollars to the cost of that car.
Mortgages and other loans carry similar penalties for low credit scores.
Things you can do
If you are in the market for a home, and missed locking in a lower rate last month, you should ask about an adjustable rate, or ARM, usually a point or two lower than the fixed rate.
Just know it typically readjusts higher in 3 to 5 years, so it may only be a smart idea if you think you will move in a few years.
Now is good time to try to boost your credit score, to get the lowest rates possible.
Bankrate suggests consolidating high interest credit cards with a balance transfer into a low interest card.
You can also improve your score by paying down credit cards, and making sure you are not late on any loan payments going forward.
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