Even with the Federal Reserve increasing interest rates on loans, we are still in the midst of our current inflation crisis. The optimist will say that we will weather this storm and come out better for it. The pessimist will have the opposite reaction, of course, and proclaim that there’s no end to this crisis in sight. But both can agree that we have options to stave off the effects of inflation. Here are 5 ways to fight inflation:
Credit Cards: Adjust your Annual Percentage Rate
We all, at times, lean too much on our credit cards when making purchases. It’s enticing to adopt the ‘buy now, pay it for it later’ mentality. But without careful consideration, our credit card debt could increase and create a mountain of debt too big to overcome.
As of July 2022, the average Annual Percentage Rate (APR) of a credit card is 20.82%. Most people are unaware of the APR and how it affects their credit card debt. Many credit card companies will entice new clients with a low APR rate, but after the first 1-2 years, the APR will rise to an exorbitant amount.
There are ways to alleviate this stress-point. You can call your credit card company and ask for your rate to be lowered. Often, they will provide you a lower APR for a certain period. Another option would be to transfer your existing balance to a brand-new credit card with zero-interest. Utilize the same tactics that these companies use to get new clients against them, by taking advantage of their introductory APR rates which sometimes start at 0% and last anywhere from 12-18 months.
Avoid late fees
Sounds simple enough, right? All of us understand that late fees are not good for our credit score and they’re a sure-fire way to create a sizeable amount of debt. And yet, we all incur late fees at one time or another. Life has a way of getting in the way, which is why there are some tools created to help us remember.
Most vendors or companies offer an automatic payment option. You can set the amount you’d like to pay and the date you’d like the transaction to occur. There are multiple autopay apps and software to help with keeping up on your payments. Utilize the digital calendar reminders and phone alerts to provide help remembering bill due dates. And always, try to pay over the minimum due – especially with credit cards – as it will put a bigger dent into your debt owed.
Avoid Personal Loans
If you noticed in the credit card section of his article, we didn’t mention taking out a personal loan to pay off your credit card debt. Even if the personal loan rate starts off lower than your current credit card rate, those personal loan interest rates are variable and, ultimately, the rates will increase over time.
The ‘buy now, pay later’ approach only leads to more debt and missed payments. Often, people will transfer their credit card debt to a loan, but they never cancel the credit card. Now they have the chance to repeat the same mistake and run up their credit card bill. Soon, their dealing with a personal loan at an increasing interest rate and more credit card debt to pay off.
Grocery Store Buying Strategies
Develop a spending plan for grocery shopping. Make sure to compare between competitors to find the right item at the right price. Store-made brands, or generic brands, are often cheaper than more popular brand names. For those food and toiletry items that you use most, buy in bulk at stores like Costco or Sam’s Club.
Speaking of stores like Costco and Stop & Shop, there are gas rewards for both these locations. Costco offers gasoline to their members at a lower rate than most gas stations. If you have a Stop & Shop rewards card, there are reward points you can use for lower gas savings.
Budgets should always be created with the ability to adapt when changes occur in your life. Goals and spending habits change over time. Compensation may change. It’s important to consistently evaluate your budget. Adjustments to your budget could be the key to easing the burden caused by inflation.
Take a long look at certain areas of your expenses. Gym memberships that are not being used as much. Streaming services that are used less than others. Re-examine your bills. Cable, Internet, Utilities and more – All of these services may have lower-tiered options that can provide you with savings.
Are you using budgeting apps or spreadsheets to have a clear understanding of income versus expenses? Your budget is the most important tool against protecting your income, controlling expenses and, ultimately, fighting inflation.