Interest rates are currently around 5.25%, which is on the high end for the last decade. The downside to this is that interest rates on mortgages and other loans are high, which makes borrowing difficult. But, there are a few things that you can do to take advantage of these high interest rates:
- Open a high yield savings account. You can now open an account and earn over 5% interest annually. With a 5.25% rate, if you invest $20,000 you could earn $1,050 after one year.
- Consider investing in corporate bonds. Bonds are essentially loans to corporations and now they are paying high rates. They are a less risky investment option compared to stocks.
- Prioritize paying off debts that have fluctuating interest rates over debts that have fixed, lower rates.
- If possible, pay in full for big ticket items now rather than pay for financing. For example, if you need to buy a new dishwasher, it could cost several hundred dollars more to pay for the new dishwasher if you pay in installments. If necessary, wait a little longer to buy it and accumulate the amount in full so you can pay the full amount at once.
Sage Personal Finance 