MINNEAPOLIS — We all know interest rates have been going up and if you're like most people, your initial reaction to that news is not positive.
On Tuesday, the current average 30-year fixed mortgage rate was 6.56%, increasing 11 basis points since the same time last week. Inflation rates have dropped from a peak of 9.1% in June 2022 to 6.5% in December 2022.
But experts say not to worry, there are some cases in which you can use higher interest rates to your advantage.
Nicole Middendorf, CEO of Prosperwell Financial, recommends taking a look at short-term places you can put your money, things like certificates of deposit (CDs), treasury bills or money market accounts.
With interest rates high, Middendorf says some three-month CDs are paying 4% interest.
If you're in a stable spot financially and have six to 12 months of expenses set aside for emergencies, she recommends moving some of that cash.
"I'm not saying take all of your liquid money and lock it up, but let's say you have six months set aside in a money market account. Maybe you take three months worth of it and put it in a CD, because that means in three months, your money will become available and you're making four percent," Middendorf said.
There's a big thing to consider here though: high-interest debt.
If you have any credit card debt racking up double-digit interest, it does not make sense to put cash into one of those short-term investments until that debt gets paid off.
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