CD + IRA RATE SPECIAL: 12-month at 1.31% APY* or 6-month at 1.00% APY* $500 minimum to open / *Annual Percentage Yield

There’s only one certainty in life: change. And you don’t need to be a financial expert to see that the current changing market directly affects all of us. We can see it in the prices of our gas and groceries, electronics and vehicles, and in our rent and mortgages.

This isn’t the first time we’ve experienced a changing market and it won’t be the last. Inflation, recessions, and other ebbs and flows in the economy are natural and can be expected. But don’t worry—there’s still time to be proactive and protect your finances.

Below is an explanation of what a changing market is, what it means for you and your family, along with five things you can do to come out stronger on the other side.

What’s a ‘changing market’ mean?

A “changing market” is generally referring to noticeable changes in the micro and macro economies in the US including the stock market, investing and retirement accounts, real estate, and everyday purchases we make such as gas, groceries, and other goods and services.

Why is the market changing?

The most recent changes are due in large part to global events including the COVID-19 pandemic and labor and supply shortages. During the pandemic, large numbers of people were cutting back on expenses and extra spending because of the uncertainty they felt for the future.

To stimulate the economy and ease consumer anxiety, the Federal Reserve drastically reduced interest rates to historic lows to encourage people to make more purchases. We also saw a decrease in the prices of goods at this time because of simple supply and demand. (We saw more supply, less demand.)

The inflation we’re currently experiencing is the pendulum swinging the other way, so to speak. We’re seeing less supply, more demand, and therefore higher prices.

What can I do to prepare for a changing market?

While there is more than one answer (and it may depend on individual circumstances), we’ve compiled five effective things you can do starting today to prepare yourself for a changing market.

Switch from a CD to a money market account. First, let’s define both items. A “CD” stands for a certificate of deposit. This CD account can be considered a long-term savings account where you deposit a specific amount of money for a certain amount of time at a fixed interest rate. Funds cannot be withdrawn until the CD has matured (the term has ended). Terms can range from 6 months to five years or more.

A money market account (MMA) can be thought of as most any other savings account with your bank, credit union or other financial institution. Their interest rates fluctuate with the market and generally have more flexible guidelines than a CD.

If you have a CD, consider transferring those funds into a money market account. This will allow you to benefit from the rising interest rates and have the flexibility of depositing and withdrawing funds as you see fit (or in case of emergency). But, check with your bank for any early withdrawal penalties you may incur and weigh the benefit of the interest rate vs. penalty before finalizing the switch. A customer service representative should be able to advise you.

Review mortgage rates to buy or refinance. If you are looking to buy a home, talk to your lender now to lock in a decent interest rate. Since interest rates were at historic lows during the pandemic (from 2020-early 2022), the current rates are perceived as “high,” when in fact they’re quite normal, comparatively speaking. With that said, if you lock in a 5, 6, or even 7% interest rate this year, you’ll save more money than if you decided to wait to purchase a home when rates may be higher.

If you own a home, consider refinancing or opening a home equity loan or line of credit. A mortgage refinance will allow you to apply for and potentially lock in a lower interest rate—saving you money over the life of your mortgage. A home equity loan or line of credit will allow you to borrow money against your home’s equity to further invest in your home’s value. People have used their home’s equity to fund needed repairs, upgrades, and renovations.

Keep a close eye on your credit cards. You guessed it, interest rates are rising everywhere not just on mortgage rates and savings accounts. If you have credit cards and use them regularly but pay off the balance each month, the increasing interest rates may not affect you as much. However, if you tend to carry balances on your credit cards, this will increase the amount of money you’re paying over time*

If you have credit card debt, consider it a top priority to pay off the balances as quickly as you can to avoid paying more as interest rates rise.

*This also applies to variable rate personal loans, private student loans, and more.

Adjust your budget. Along with rising interest rates, prices on everyday items have increased as well. Now is a great opportunity to revisit your monthly budget. Are there places where you can reduce your spending to allow for more money towards gas and groceries? Keep in mind that this doesn’t need to be permanent, but just to confidently get you through a changing market.

If you’re readjusting your budget and you have credit card debt, we suggest cutting expenses where you can in order to allocate those funds toward any credit card balances that you’re carrying.

Remember: If you’re only paying the minimum amount due, you’re only paying accrued interest and not the principal balance (what you borrowed). This means you’re not actually paying down debt.

Think ahead on any big purchases. Were you planning to buy a car? Apply for student loans? Buy something you wanted just because? We recommend that you take a moment to pause and reflect on any potential “big purchases” during a changing market.

Ask yourself:

  1. Is the purchase necessary?
  2. If it’s necessary, can it wait?
  3. If it can’t wait, can you get a cosigner for a lower interest rate?
  4. If you were planning to use a credit card, can you apply for a personal loan with a lower interest rate instead?

A changing market isn’t a time to worry or stress, but to carefully plan for changes and unexpected events. And while you can’t directly stop rising prices and interest rates, you can control your short- and long-term goals and spending and how you adapt and empower yourself in an uncertain time. Talk about financial resiliency!