Hi, let me try to break this down for you. So *** credit crunch is just how it sounds right. It's when banks tighten their lending standards to keep *** healthy balance sheet. So you know how banks normally operate? Here's the bank, here you are or your business, they're lending money out all the time. Right? This is how banks make money, they lend money out, but banks could reduce the flow of credit to businesses slow this down *** little bit. Right? And that's *** credit crunch right now. Finance experts say it could happen with small and mid sized banks. So what does that mean for you? Now, loans are going to be harder to get banks will still offer them. But like I said, and that old picture it's going to go *** little slower. They're going to be stricter terms, higher interest rates. So how do you care for that if you have *** looming credit need if you need credit soon, make sure your credit score looks the best it can. Since there will be stricter rules, take steps to boost your credit score, like paying off your credit card bills and any debt you have on time and in full, if you can, if you have *** small business with loans out and they're nearing the end of their term, try to figure out how to refinance that loan or roll it over into another. And finally, in case tight credit triggers an economic downturn, it can't hurt to put six months of emergency savings into *** separate bank account at *** different bank. Right. That's going to help you out, follow those tips and you should be ok. That's all for today. I hope it helps back to you.
Officials say ‘mild recession’ likely in 2023. Get your savings ready now
Between instability in the banking system and the threat of a recession in 2023, it’s time to start shoring up your savings.
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Updated: 7:02 AM CDT May 10, 2023
PHNjcmlwdCB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiIHNyYz0iaHR0cHM6Ly9zdGF0aWMubXlmaW5hbmNlLmNvbS93aWRnZXQvbXlGaW5hbmNlX3ZpZXdwb3J0X2RldGVjdGlvbi5qcyI+PC9zY3JpcHQ+PHNjcmlwdCBhc3luYyB0eXBlPSJ0ZXh0L2phdmFzY3JpcHQiPm15ZmlXYXRjaFdpZGdldCgnbXlmaVdpZGdldF8wJyk7PC9zY3JpcHQ+=Jean Folger is writer specializing in real estate and personal finance. She has written for Investopedia, The Motley Fool, Business Insider, and more. She is also the co-founder of PowerZone Trading, a company that has provided software, consulting, and strategy development services to active traders and investors since 2004. Her goal is to help people make better financial decisions, so they have more money and time to spend on the things that matter most.Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.Mobile app users, click here for the best viewing experience.The U.S. has successfully evaded a recession for months, thanks partly to the Federal Reserve's monetary policy decisions and interest rate hikes. But fallout from the banking crisis could lead to a "mild recession starting later this year," according to the minutes from the Federal Open Market Committee's (FOMC) March meeting. The impacts could be far-reaching, from layoffs and tighter credit to falling consumer spending and stock prices.While a recession is looming and even likely, it's not inevitable. "A soft landing is still a possibility if we maintain strong consumer spending, low unemployment rates, job growth, and a moderation of inflation," says Chris Moore, director at Alliant Credit Union. In fact, at a press conference after the FOMC's May meeting, Fed Chair Jerome Powell countered his fellow committee members' statement by saying that he believes, "it’s possible that this time really is different. Avoiding a recession is, in my view, more likely than having a recession.” However, he suggested other members of the FOMC maintain their position from March that a recession is on the horizon.Still, with concerns over Recession 2023, it's a good time to shore up your finances. Here are four money moves to help you navigate an uncertain economy 1. Pay down or consolidate debt"To be in the best possible financial position in times of economic uncertainty, it's crucial to have a handle on debt," says Moore. Interest charges can add up to hundreds of dollars a month, so it pays to tackle your debt ASAP. While paying down debt is never easy, here are a few strategies to consider:Debt avalanche: With this strategy, you tackle your debts in order from highest to lowest interest rate, regardless of balance. Depending on your situation, you can save money by getting rid of your highest interest rate debts first. However, you could lose motivation if paying off the first debt takes a long time. Debt snowball: With this method, you pay off debt in order from smallest to largest balance, regardless of interest rate. You keep making minimum payments on everything but your smallest debt, which you pay off as quickly as possible. After that, you move on to the next smallest balance, and so on. This option can make it easier to stay on track because the small, frequent victories can provide motivation. Debt consolidation loan: "When it comes to consolidating debt, a single payment may be attractive, but what convinces many people is the promise of a lower combined monthly payment," says Moore. A debt consolidation loan (i.e., a personal loan used to pay off debts) can lower your overall interest charges and reduce your repayment time. If you're interested in taking out a personal loan, Moore says it's important to know your goals beforehand. "If you're looking to make payments easier, you should extend your term. If you want to save more on interest and pay off your debt quicker, pick a shorter team."Balance transfer credit cards: Balance transfer credit cards let you transfer debt racked up on one or more credit cards to a new credit card — one that often carries a low or 0% interest rate for about 12 to 21 months. The standard interest rates kick in after the introductory period, "so it's key to create a manageable monthly payment plan to erase debt before your interest-free period is up," says Moore. Another consideration: The transaction can cost 3% to 5% of the amount you transfer. As such, Moore recommends calculating the transfer cost and deducting it from your expected savings to determine if the offer is worthwhile. TIP: No matter how you tackle your debt, tap the brakes on unnecessary spending so you don't pile on more debt. Also, keep up with your minimum payments to avoid extra fees and damage to your credit score. 2. Put your cash to work Once you pay off your debt, you should have more cash each month to save and invest. Start by saving at least three to six months' worth of living expenses in an emergency fund — and put that cash to work. "A high-yield savings account is a great tool to earn extra money while having the money liquid enough to deal with emergencies or unforeseen circumstances such as a layoff," says Moore. Another option is a certificate of deposit. "A CD is a low-risk investment tool for those that don't mind reducing their availability to liquidity for a certain amount of time," says Moore. "CDs may help you save money faster because they often have higher interest rates than savings accounts."Whether you choose a high-yield savings account or a CD, your funds are insured (up to $250,000 per depositor, per account ownership category) at FDIC-insured banks and NCUA-insured credit unions. One bright spot amid the economic uncertainty: Interest rates on savings accounts and CDs, particularly ones offered by online banks, are the highest they’ve been in years. It’s possible to find rates upwards of 5% if you’re willing to shop around.3. Boost your retirement contributionsTax-advantaged retirement accounts are another smart place to save. If your budget allows, contribute enough to take full advantage of any company matches to build your nest egg even faster. Here's a rundown of the contribution limits for 2022 and 2023: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4. Invest wiselyMarket fluctuations are normal, but economic uncertainty can increase volatility and make losses more likely. Diversification helps reduce risk (no matter what's happening in the economy) and improves the chances that you won't lose money — or that you'll lose less than if you weren't diversified. Moore says to stay calm and keep a long-term perspective when investing. He adds that stock investments can yield a great return, but they're very sensitive to market shocks and can't guarantee you'll receive a return on your investment. "If you're looking for a safer investment alternative, a high-yield savings account or a CD is a great option as you don't have to worry about making a poor investment decision or misjudging the market," says Moore. Bottom lineThe Fed meeting minutes note that the banking sector is "sound and resilient" despite the Silicon Valley Bank and Signature Bank collapses. While that’s encouraging, it’s still too early to predict the extent of a potential credit crunch or recession. In the meantime, these steps can improve your financial stability, help you take advantage of rising interest rates on savings accounts, and prepare you for economic uncertainty — just in case. Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.This article was originally published on SFGate.com and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at lauren.williamson@hearst.com.
Jean Folger is writer specializing in real estate and personal finance. She has written for Investopedia, The Motley Fool, Business Insider, and more. She is also the co-founder of PowerZone Trading, a company that has provided software, consulting, and strategy development services to active traders and investors since 2004. Her goal is to help people make better financial decisions, so they have more money and time to spend on the things that matter most.
Hearst Television participates in various affiliate marketing programs, which means we may get paid commissions on editorially chosen products purchased through our links to retailer sites. This may influence which products we write about and where those products appear on the site, but it does not affect our recommendations or advice, which are grounded in research.
Mobile app users, click here for the best viewing experience.
The U.S. has successfully evaded a recession for months, thanks partly to the Federal Reserve's monetary policy decisions and . But could lead to a "mild recession starting later this year," according to the minutes from the March meeting. The impacts could be far-reaching, from layoffs and to falling consumer spending and stock prices.
While a recession is looming and even likely, it's not inevitable. "A soft landing is still a possibility if we maintain strong consumer spending, low unemployment rates, job growth, and a moderation of inflation," says , director at Alliant Credit Union.
In fact, at a press conference after the FOMC's May meeting, Fed Chair countered his fellow committee members' statement by saying that he believes, "it’s possible that this time really is different. Avoiding a recession is, in my view, more likely than having a recession.” However, he suggested other members of the FOMC maintain their position from March that a recession is on the horizon.
Still, with concerns over Recession 2023, it's a good time to . Here are four money moves to help you
1. Pay down or consolidate debt
"To be in the best possible financial position in times of economic uncertainty, it's crucial to have a handle on debt," says Moore. Interest charges can add up to hundreds of dollars a month, so it pays to .
While paying down debt is never easy, here are a few strategies to consider:
- Debt avalanche: With this strategy, you tackle your debts in order from highest to lowest interest rate, regardless of balance. Depending on your situation, you can save money by getting rid of your highest interest rate debts first. However, you could lose motivation if paying off the first debt takes a long time.
- Debt snowball: With this method, you pay off debt in order from smallest to largest balance, regardless of interest rate. You keep making minimum payments on everything but your smallest debt, which you pay off as quickly as possible. After that, you move on to the next smallest balance, and so on. This option can make it easier to stay on track because the small, frequent victories can provide motivation.
- Debt consolidation loan: "When it comes to consolidating debt, a single payment may be attractive, but what convinces many people is the promise of a lower combined monthly payment," says Moore. A (i.e., a personal loan used to pay off debts) can lower your overall interest charges and reduce your repayment time. If you're interested in taking out a , Moore says it's important to know your goals beforehand. "If you're looking to make payments easier, you should extend your term. If you want to save more on interest and pay off your debt quicker, pick a shorter team."
- Balance transfer credit cards: Balance transfer credit cards let you transfer debt racked up on one or more credit cards to a new credit card — one that often carries a low or 0% interest rate for about 12 to 21 months. The standard interest rates kick in after the introductory period, "so it's key to create a manageable monthly payment plan to erase debt before your interest-free period is up," says Moore. Another consideration: The transaction can cost 3% to 5% of the amount you transfer. As such, Moore recommends calculating the transfer cost and deducting it from your expected savings to determine if the offer is worthwhile.
TIP: No matter how you tackle your debt, tap the brakes on so you don't pile on more debt. Also, keep up with your minimum payments to avoid extra fees and damage to your credit score.
2. Put your cash to work
Once you pay off your debt, you should have more cash each month to save and invest. Start by in an — and put that cash to work. "A is a great tool to earn extra money while having the money liquid enough to deal with emergencies or unforeseen circumstances such as a layoff," says Moore.
Another option is a . "A CD is a low-risk investment tool for those that don't mind reducing their availability to liquidity for a certain amount of time," says Moore. "CDs may help you save money faster because they often have higher interest rates than savings accounts."
Whether you choose a high-yield savings account or a CD, (up to $250,000 per depositor, per account ownership category) at banks and credit unions.
One bright spot amid the economic uncertainty: Interest rates on savings accounts and CDs, particularly ones offered by , are the highest they’ve been in years. It’s possible to find rates upwards of 5% if you’re willing to shop around.
3. Boost your retirement contributions
are another smart place to save. If your budget allows, contribute enough to take full advantage of any to build your nest egg even faster.
Here's a rundown of the :
4. Invest wisely
Market fluctuations are normal, but economic uncertainty can increase and make losses more likely. (no matter what's happening in the economy) and improves the chances that you won't lose money — or that you'll lose less than if you weren't diversified.
Moore says to stay calm and keep a long-term perspective when . He adds that stock investments can yield a great return, but they're very sensitive to market shocks and can't guarantee you'll receive a return on your investment. "If you're looking for a safer investment alternative, a high-yield savings account or a CD is a great option as you don't have to worry about making a poor investment decision or misjudging the market," says Moore.
Bottom line
The Fed meeting minutes note that the banking sector is "sound and resilient" despite the and collapses. While that’s encouraging, it’s still too early to predict the extent of a potential credit crunch or recession. In the meantime, these steps can improve your , help you take advantage of rising interest rates on savings accounts, and prepare you for economic uncertainty — just in case.
Editorial Disclosure: All articles are prepared by editorial staff and contributors. Opinions expressed therein are solely those of the editorial team and have not been reviewed or approved by any advertiser. The information, including rates and fees, presented in this article is accurate as of the date of the publish. Check the lender’s website for the most current information.
This article was originally published on and reviewed by Lauren Williamson, who serves as Financial and Home Services Editor for the Hearst E-Commerce team. Email her at lauren.williamson@hearst.com.
