Published on January 09, 2023
2023 tips for borrowers and savers to support your financial goals
Financial headwinds are blowing much harder here at the start of 2023 compared to where the economy was 12 months ago. The intensification of severe inflation and rising interest rates could lead to a recession over the next 12-24 months. The combination of inflation/higher interest rates with low unemployment puts consumers in a unique predicament.
Fortunately, there are opportunities for both consumers and businesses – no matter what their financial position is. Most of us are both borrowers and savers at various points in our lives.
Farmington Hills Member Center Manager Toros Bardakjian suggests members and non-members consider creating a budget as you start the new year with individual categories. They can use the “Budget” resource under Financial Tools of their online Community Choice account to better track income and expenses. This exercise helps consumers feel more confident in their financial future, he says.
Here are specific tips for borrowers and savers.
The importance of your credit report and comparing your balances to your limits
Checking the validity and accuracy of your credit report (a 2021 Consumer Reports study indicates that up to 30 percent of consumers have errors on their report)
The potential to take advantage of 0% balance transfers before year-end
Confirming your credit report is accurate is particularly important during periods of higher interest rates. Getting the best rate possible, whether for a mortgage or car loan, can mean savings of hundreds of dollars per month. Visit Credit Score, powered by SavvyMoney, when logged into your Community Choice account to get a better understanding of your credit score and what’s on your report.
“You don’t want to be in that 30 percent,” Bardakjian says. “Even if you aren’t in need of a new loan immediately, any mistakes in your credit score can adversely impact your financial profile for a couple of years.
“The report and score are used by lenders to make a decision on the likelihood that you will pay your bills on time.”
His talking points for savers include:
Taking advantage of Certificate of Deposit (CD) rates at their highest level in 20 years
Maxing out 401K and other employer-sponsored retirement plans
Contributing to a Traditional or Roth IRA and options for converting from one to another
CD rates have not been this high for well over a decade, which signifies worry-free exciting opportunities, Bardakjian says. Consumers should keep in mind no withdrawals are allowed during the duration period for the CD without incurring a significant penalty. Additionally, lower stock and mutual fund prices mean that employees contributing to their 401K plans are purchasing investments at lower prices than they did one year ago.
Community Choice is currently running a 13-month CD for 2.5% APY.* Funds in credit unions are insured up to $250,000, backed by the NCUA, National Credit Union Administration. That means a $10,000 deposit into a CD would yield more than $271 of interest over 13 months.
Community Choice members can track their progress by logging in to their account online. Considering using Community Choice’s Targets tool to create short term and long-term saving goals. “Set a budget for any funds you might contribute from your paycheck or put away in a CD or other higher investment option,” Bardakjian says.
*APY = Annual Percentage Yield