Hot Take: Low Interest Rates Aren't Always a Good Thing

CBS news recently released a report stating that the federal interest rate is expected to drop at least four separate times this year, resulting in a marked increase that reflects the recent economic improvements for the United States.

While most residents are feeling pretty excited about the upcoming estimated cuts, financial experts are urging caution. Companies in every industry can benefit from a conservative approach when it comes to spending, even in economic upturns. Our funding specialists say that these are some important things to keep in mind:

Keep Your 'High Interest' Habits

One of the good aspects of a high interest rate environment is that it prevents people from borrowing excessively. Because people are wary of spending the extra interest, they use more creative and resourceful approaches to manage their funds without going into debt. When interest rates drop, it's common for people to become less inhibited about their spending, which can encourage more impulsive choices that can drive them into debt.

Prioritize Your Profit

In the past, we've talked about ways that you can use high-interest loans to your advantage by choosing a time period and purpose for the money that will help you turn a profit. This strategy can be useful in any economic situation, since keeping your focus on what you'll do with the money you gain will help prevent you from making impulsive purchases.

Be Smart With Bill Payments

During a sudden windfall, people often get focused on the things that they want to buy. While this is a great way to reward yourself for all of your hard work, it can also cause problems when you forget to save for the next rainy day. You can certainly set aside funds for things that will improve your work-life balance, but don't forget to do your due diligence to maintain your financial health and set a stronger foundation for the next expected hardship. This can include strategies like budget cuts, financial analysis, rebranding strategies, and more.

When you're looking at estimated cuts for interest rates, treat them like a sale at your favorite department store. Get what you need at a better rate, but don't over purchase just because it's cheaper. You'll end up with a bunch of debt you don't need and a slew of problems that will be harder to manage the next time the economic situation changes.

However, if you do find yourself in a sticky situation, there are resources to help you get back on track. That's where our funding specialists come in. Feel free to reach out to us for more information and we can guide you to the next bright horizon.