Let’s talk about something that doesn’t trend on TikTok, but seriously affects your wallet: interest rates. When the Fed raises rates, it doesn’t just impact Wall Street—it hits your savings, loans, credit cards, and everyday spending.

So if you’re Gen Z and wondering “How do I make smart money moves right now?”—you’re in the right place.

Here’s a breakdown of what rising rates mean for you, and 5 strategic things you should be doing with your money when interest rates are high.

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🤔 First, What Even Are Interest Rates?

In simple terms:
The Federal Reserve (aka “The Fed”) controls a key interest rate called the federal funds rate. When inflation is high, they raise rates to slow down spending.

When that happens:

• Borrowing becomes more expensive
• Saving becomes more rewarding
• Debt gets heavier

And yes, all of that hits your bank account.

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📉 What High Interest Rates Mean for Gen Z

• Credit card APRs average over 20% in 2024—the highest in decades
• Student loan and car loan payments cost more (especially if they’re variable-rate)
• Mortgage rates are above 7%, making it harder to buy a home
• But savings accounts and CDs now offer 4–5%+ returns, which is actually great if you’re trying to build savings

So… what now?

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💡 5 Money Moves to Make When Interest Rates Are High

1. 🚫 Pay Off High-Interest Debt ASAP

Credit cards are the #1 enemy in a high-rate environment.

📊 Average credit card debt per Gen Z borrower is $2,854 (Experian, 2024)
And with 20%+ interest, that debt snowballs fast.

What to do:

• Prioritize debt payments using the avalanche method (tackle highest-interest first)
• Consider a 0% balance transfer card if you qualify
• Avoid using credit for non-essentials during this time

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2. 🏦 Park Your Cash in a High-Yield Savings Account (HYSA)

This is one of the few times you actually earn money on your savings.

Many HYSAs are offering 4.5%–5.25% APY—up from near-zero rates just a couple years ago.

What to do:

• Open a HYSA (Ally, SoFi, Capital One, or online-only banks are good starts)
• Move your emergency fund and short-term savings there
• Let that interest compound—free money, no risk

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3. 🧠 Think Twice Before Taking Out New Loans

That car loan or personal loan? It costs more now.

📊 In 2024, average new car loan rates are 7–9%.
Personal loans? Often 11–15%+

What to do:

• Delay big financed purchases if possible
• Consider buying used, or save up and pay more in cash
• Explore 0% financing options only if you can pay on time

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4. 📈 Don’t Stop Investing—Just Be Strategic

Yes, high interest rates can rattle the stock market. But Gen Z has time on their side.

Historically, long-term investors still come out ahead, even when they invest during high-rate periods.

What to do:

• Keep contributing to your Roth IRA or 401(k)
• Focus on index funds or ETFs with broad market exposure (like VTI or S&P 500)
• Consider Series I Bonds (government-backed, inflation-protected) if you want ultra-safe returns for cash you don’t need soon

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5. 🧾 Renegotiate, Rebudget, Reprioritize

High rates = higher costs = time to refresh your budget.

What to do:

• Revisit your subscriptions, spending habits, and priorities
• Negotiate bills (especially internet, phone, or insurance)
• Set new savings goals—this is a great time to build an emergency fund while rates are in your favor

💡 Pro Tip: Use a budgeting app like YNAB, Rocket Money, or Copilot to track and optimize spending.

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🧠 TL;DR: When Rates Rise, Get Wiser

Don’t panic when rates go up. Pivot.

✅ Pay off high-interest debt
✅ Save smarter with high-yield accounts
✅ Delay expensive borrowing
✅ Stay consistent with investing
✅ Reassess your money plan

Interest rates may go up and down, but your ability to adapt and grow will always be your biggest financial asset.