SALT LAKE CITY — The central bank’s flagship rate increase is small, but that doesn’t mean there aren’t big issues ahead for Gen Z.
“Younger people are less likely to have put aside significant savings. They’re more likely to have student debt. They’re more likely to have auto debt and so for them this is really a problem,” says Rachel Schneider, CEO of Canary and author of The Financial Diaries.
She says her Gen Z clients often request funds for the basics: help with rent, food or utilities.
But what about everyone else?
“The reality is, individual consumers can’t do a lot if the basic price of housing, transportation and food has gone up," says Schneider. "We can advise people to do their very best to budget, but I don’t think we’re in an overspending crisis. We’re in a "prices going up" crisis.”
“Mortgage rates have gone way up, car loans to credit card rates. If you include all of this, it’s a sizeable expense for people,” says Ted Rossman with Money Management International.
Rossman says while the increase is minimal, a little does add up.
But on the flip side it could be welcomed by consumers trying not to spend.
“It’s good news for people who are trying to save because it means the yield on things like high-yield savings accounts and CDs and money market accounts are probably going to go up in the near future,” says LendingTree consumer analyst Matt Schulz.
Schulz says this could be the first step of several increases down the line, depending on several factors, including the war in Iran driving up oil prices.
However, if you want to reassess how you look at your finances, now is a good time.
“Shopping around and comparing offers if you’re in the market for a new loan. You can do it by refinancing debt that you currently have with a balance transfer card or low interest personal loan. You can even call your credit card issuer and ask for a lower interest rate on your card,” says Schulz.
But if solutions seem out of reach, you’re not alone.
Only time will tell when we all could see some relief.
“Bring housing prices down, the cost of education, the cost of healthcare. We need all of those major costs to come down for people, and those require policy solutions that are outside of the Fed’s control,” says Schneider.