How Low Interest Rates Are Hurting You
Interest rates have been low for a long time, as the Federal Reserve tries to spur economic growth. Yet even though low rates are great for borrowers, savers have been getting the short end of the stick.
In this following video, Dan Caplinger, The Motley Fool's director of investment planning, looks at low rates and how they've hurt many people. Dan notes that low rates are helpful in making loans like home mortgages cheap. But because Wells Fargo , Bank of America , and other major lenders tend to tie consumer loans and credit card rates to formulas that provide for additional interest on top of popular benchmark rates, most consumer loans have already hit the lowest levels they're likely to see. Meanwhile, Dan points out that savings rates have been so low that they've forced people into riskier dividend stocks, either via individual companies or through dividend ETFs. Dan concludes that as hard as it is for some savers, low rates aren't likely to end soon.
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The article How Low Interest Rates Are Hurting You originally appeared on Fool.com.Dan Caplinger owns warrants on Bank of America and Wells Fargo. The Motley Fool recommends and owns shares of Bank of America and Wells Fargo and has options on Wells Fargo. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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