As a college student, you may be wondering why interest rates matter and how they can affect your life. Well, interest rates play a crucial role in the economy and can have a significant impact on your finances. Here are a few reasons why you, as a member of Gen Z and a college student, should care about interest rates.
First and foremost, interest rates determine the cost of borrowing money. If you plan on taking out student loans to pay for your education, the interest rate on those loans will directly affect how much you end up paying back. Higher interest rates mean higher monthly payments, which can make it more difficult to manage your finances and pay off your debt.
Interest rates also affect the housing market. When interest rates are low, it’s cheaper to borrow money to buy a house, which can lead to an increase in home sales. On the other hand, high interest rates can make it more expensive to borrow money for a mortgage, which can slow down the housing market. As a college student, you may not be thinking about buying a house yet (you may eventually go house hunting), but it’s still important to be aware of how interest rates can affect the housing market and the economy as a whole.
Another reason to care about interest rates is that they can affect your savings and investments. When interest rates are high, it’s more profitable to save your money in a savings account or invest in a high-yield savings account or CD (certificate of deposit). On the other hand, low interest rates mean that you may not earn as much interest on your savings, which can make it more difficult to grow your money.
To wrap it up, interest rates are an important factor to consider when it comes to your money, whether you’re a college student or not – it doesn’t discriminate. But by understanding how interest rates work and how they can affect you, you can make more informed decisions about borrowing money, saving, and investing. But never fear! MoneyUp is here to help break down these complicated notions through LearnUp!