Interest rates remain high, impacting consumer spending

Consumers are facing higher borrowing costs and rising prices as interest rates remain elevated, according to analysts. The Federal Reserve decided to keep interest rates steady due to increasing uncertainty from trade policies. As a result, consumers must be cautious with their finances while also trying to maximize savings. If you plan to make big purchases, now might be the time. Major items like cars and appliances are expected to rise in price because of tariffs imposed by President Donald Trump on materials from Canada and Mexico. Some estimates suggest that vehicle prices may increase by $4,000 to $12,500 due to these tariffs. Many consumers are already cutting back on less essential spending, like entertainment, as discretionary spending growth is lagging behind essential purchases. The cost of carrying credit card debt remains high, with average interest rates around 20.1%. Financial experts recommend taking advantage of balance transfer offers to pay down debt during promotional periods. Home mortgage rates are also rising, leading to a decline in home loan applications. For homeowners, experts advise against tapping into home equity unless it’s for urgent repairs. As many retirement savers worry about their 401(k) plans amid market volatility, financial advisers emphasize the importance of focusing on long-term goals instead of reacting hastily. Investing in Treasury inflation-protected securities might offer some stability, though it poses risks due to market fluctuations. Despite uncertainty, high interest rates can lead to better returns for savings accounts, with some offering rates up to 4.86%. Financial advisers suggest having an emergency fund that covers three to six months of living expenses, especially for those in less stable job markets.