The Latest Personal Finance News for November 2023

Federal Reserve Expects a Bumpy Path Toward Its Inflation Goal

The inflation rate has dropped significantly since it peaked in June 2022, but it still remains high. In October, the Bureau of Labor Statistics reported that the core inflation rate, which includes prices for consumer goods and services and excludes volatile food and energy costs, rose by 4.1% in September from the previous year. That’s more than double the Federal Reserve’s target of 2%.

As a result, Fed chair Jerome Powell noted that the path toward a healthy inflation rate will likely be bumpy, probably resulting in more layoffs and slower economic growth. Meanwhile, interest rates will likely remain high, with economists forecasting only a 1% drop in 2024.

Why It Matters

Interest rates will probably be elevated for quite some time, which means that it will remain expensive to borrow money—but attractive interest rates on high-yield savings accounts will persist as well. As the economy slows down, more Americans may be impacted by reduced wage growth and increased unemployment.

What You Can Do

• See how hard inflation is hitting your state compared to others.
• Read up on ways you can fight inflation.
• Understand how inflation impacts your holiday shopping.
• Learn about low-risk investments you can rely on when inflation is high.

Buy Now, Pay Later Expected to Generate $17 Billion in Holiday Spending

According to an online shopping forecast by Adobe, Americans are expected to spend $17 billion on holiday shopping using buy now, pay later (BNPL) services. That’s $2.5 billion more than last year’s Adobe analysis predicted, an annual increase of 16.9%.

BNPL services allow consumers to pay off eligible online or in-store purchases over time, often with no fees or interest charges.

Why It Matters

BNPL services can help out when you’re in a financial pinch, making large purchases more affordable without needing to rely on high-interest credit cards or personal loans. However, if you rely too heavily on them without an affordable plan to pay them off, you could overextend yourself and make your financial situation worse.

What You Can Do

• Learn about how BNPL services work.
• Research the pros and cons of BNPL offers.
• See how BNPL loans compare to credit cards.
• Consider whether you should use BNPL for holiday shopping.

2024 Cost of Living Adjustment Announced for Social Security Recipients

The Social Security Administration announced a cost of living adjustment (COLA) of 3.2% in 2024 for more than 71 million Americans who receive Social Security benefits and Supplemental Security Income (SSI). The federal agency pegs its annual adjustment to the consumer price index for urban wage earners and clerical workers.

The increase is a sharp decline from the 8.7% COLA for 2023, which was a result of a spike in the inflation rate.

Why It Matters

If you’re a Social Security benefits or SSI recipient, the federal agency expects benefits to increase by as much as $59 per month on average for individuals and up to $113 per month on average for families.

Depending on how inflation has impacted prices where you live, however, that may not be enough to make up for rising costs.

What You Can Do

• Get an idea of how much Social Security you’ll receive in retirement.
• Consider when to start taking Social Security payments.
• Watch out for Social Security scams.
• Learn about qualifying for credit while on Social Security.

Mortgage Rates Hit 8% for the First Time Since 2000

The average interest rate for a 30-year fixed-rate mortgage hit the 8% mark for the first time since the year 2000, according to Mortgage News Daily. Note that this rate, which is based on actual lender rate sheets, is higher than rates published by Freddie Mac, which calculates its average rate based on a survey of lenders.

Why It Matters

Financing a home continues to get more expensive, putting more financial strain on new homeowners. Additionally, high rates have reduced both the demand for and supply of new homes, including uneven activity among homebuilders, limiting prospective homeowners’ options.

What You Can Do

• Understand how rising interest rates affect mortgage costs.
• Learn how to deal with high mortgage rates.
• Read up on how mortgage interest works.
• Consider whether to get an adjustable-rate mortgage.

Good Credit Can Contribute to a Healthy Financial Plan

While there are aspects of your financial situation that are outside of your control, building and maintaining a good credit score can help you weather challenges and save money in the long run.

With Experian’s free credit monitoring service, you’ll get access to your FICO Score and your Experian credit report. With this information in hand, you can gauge your credit health and target areas of your credit profile that you can improve over time. And with real-time alerts whenever your report is updated, you can spot potential issues and fraud and address them quickly.