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Many high school students should be getting their college acceptance letters around this time of the year.
As people weigh which school to attend, making sure they won’t need to borrow too much is key, experts say.

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Families will soon find college acceptance letters in their mailboxes. As students weigh where to attend, making sure they won’t borrow too much is key, experts say.
The consequences of taking on too much student debt can be severe.

“If you borrow too much, you will have less money available for other priorities, such as buying a home,” said higher education expert Mark Kantrowitz. “You may also have to take a job that pays better as opposed to the job that matches your career goals.”
Kantrowitz found in his research that under a third of student loan borrowers who took out $20,000 or less were stressed by their debt, compared with over 60% of those who’d taken out $100,000 or more.
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The general rule of thumb is not to borrow more than you expect to earn as a starting salary, said Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit.
That figure will vary a bit based on what you plan to study. You can look up annual average incomes for different occupations at the U.S. Department of Labor’s website.

Kantrowitz also stands by this metric. “If your total student loan debt at graduation is less than your annual starting salary, you should be able to repay your loans in 10 years or less,” he said.

Kantrowitz recommends families consider colleges based on the “net price,” which is the amount they’ll have to pay with savings, income and loans to cover the bill, after aid that doesn’t need to be repaid, including grants and scholarships, is accounted for.
When calculating the four-year net cost, Kantrowitz said, keep in mind that different years may cost different amounts because some colleges offer grants or scholarships only for the first year or two.
After estimating the total tab, you can figure out — after any savings or income you plan to direct at the college bill — if what you’d need to borrow is reasonable.
“Often, the least expensive option will be an in-state public college,” Kantrowitz said. “They cost a quarter to a third of the cost of a private college but provide just as good a quality of education.”

If students find that all the colleges they applied to would leave them borrowing too much, they can look at others, as many schools still accept applications after May 1, Kantrowitz said. The National Association for College Admission Counseling usually publishes a list of colleges with space still available.
One more point: Incoming college freshmen should more or less tune out news about the Biden administration’s student loan forgiveness plan, experts say.
Even if the program survives the legal challenges it faces, there’s no guarantee there will be another wave of loan cancellation.
“You should only borrow as much as you can reasonably afford to repay,” Kantrowitz said.

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Each of the enrollment periods that occur every year from Jan. 1 through March 31 come with rules to be aware of.
You also may need to enroll in different parts of Medicare that come with their own rules.
Here’s what to know.

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A couple of Medicare enrollment periods are underway — and both end soon.
First, if you didn’t enroll in Medicare when you should have and you don’t qualify for a special enrollment period, you can sign up until March 31. Second, if you are already on Medicare and use an Advantage Plan but don’t think it’s a good match for you — i.e., your doctor is out of network — you can switch to another plan or drop it altogether, also until the end of the month.

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However, each of these opportunities comes with different rules to be aware of, and, possibly, the need to enroll in additional coverage and deal with other deadlines as well. Also, if you miss one of these periods but should have used it, you generally would have to wait for another enrollment window that allows you to get or change coverage.
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Here’s what to know.

1. If you missed your initial enrollment period, sign up now

You become eligible for Medicare at age 65, and you get a seven-month window to sign up. This initial enrollment period starts three months before your birthday month and ends three months after it.
If you missed that window and didn’t have qualifying coverage elsewhere — such as a plan through a large employer — you can sign up for Part A (hospital coverage) and/or Part B (outpatient care coverage) between Jan. 1 and March 31. Signing up during this so-called general enrollment period means coverage starts the month after you enroll; before 2023, the effective date was July 1.

Be aware that depending on how long you’ve gone without Part B coverage, you may face a late-enrollment penalty of 10% for each year you should have been signed up but weren’t. And that penalty, which is tacked on to your premium, is lifelong. 

You also can sign up for an Advantage Plan (Part C) once you’ve applied for Parts A and B during this general enrollment period, but it must be done before your Part B coverage starts. The Advantage Plan may or may not include Part D prescription drug coverage, but most do.
However, if you want a standalone Part D plan to pair with Parts A and B, this general enrollment period is not for that.
“They should consult an agent to see if they qualify for a special enrollment period for Part D, such as losing other creditable coverage in the last 63 days,” said Danielle Roberts, co-founder of insurance firm Boomer Benefits.
If you don’t qualify for a special enrollment period or an exception, you’d generally have to wait until Medicare’s fall annual enrollment period to sign up for a Part D plan.

“If there isn’t a valid special enrollment period that a broker can help you with, it’s still worth a call to 1-800-MEDICARE as they have broader ability to approve unusual special enrollment periods,” Roberts said.
Be aware that Part D also comes with a lifelong late enrollment penalty if you go without qualifying coverage for 63 days or more. That fee is 1% of the national base premium ($32.74 in 2023) for each full month you didn’t have Part D or other acceptable coverage.
Also, individuals who use the general enrollment period can sign up for a Medicare supplemental plan, or “Medigap.”
“The Part B effective date would also initiate a six-month Medigap open enrollment period, if they’d rather go that route,” Roberts said.

2. If your Advantage Plan is not a good fit, change coverage

Separately, but also between Jan. 1 and March 31, Medicare allows Advantage Plan enrollees to switch to another plan or drop it altogether in favor of basic Medicare (Parts A and B). 
Unlike during the annual fall enrollment period when you can change your mind multiple times about your coverage for the following year, you can only make one switch during the current window.
“So if you choose another Medicare Advantage Plan, choose carefully,” Roberts said, adding that you’ll be locked into that coverage choice for the rest of 2023.

If you want to return to basic Medicare instead of having an Advantage Plan, be aware that the move often means losing drug coverage — which means you would have to enroll in a standalone Part D plan.
Additionally, if you drop your Advantage Plan, don’t assume that you’ll be able to get a so-called Medigap policy, which many beneficiaries pair with basic Medicare. These plans either fully or partially cover cost-sharing of some aspects of Parts A and B, including deductibles, copays and coinsurance.
However, they come with their own rules for enrolling. So depending on your state, you may need to pass medical underwriting to get approved for a Medigap policy.
There is an exception to the medical underwriting requirement: If you are within the first year of trying out an Advantage Plan, you generally can return to a Medigap policy without facing underwriting.

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In his new book, “Poverty, by America,” Matthew Desmond says that poverty persists in the U.S. because many Americans and large companies profit from it.
“I want to be clear: I’m not calling for redistribution,” Desmond said. “What I’m talking about is less rich aid and more poor aid.”
The author also has tips on how people can become “poverty abolitionists.”

Over the last 50 years, Americans have eradicated smallpox, reduced infant mortality rates and deaths from heart disease by around 70%, added a decade to the average American’s life and invented the internet.
When it comes to the national poverty rate, however, we’ve made almost no progress. In 1970, a little more than 12% of the U.S. population was considered poor. By 2019, around 11% was.

In his new book, “Poverty, by America,” sociologist Matthew Desmond proposes a reason for that stagnation: We benefit from it.
I spoke with Desmond this month about his argument that many individuals and large U.S. companies profit from tens of millions of Americans living in poverty, and how things might finally start changing.
His last book, “Evicted: Poverty and Profit in the American City,” won the 2017 Pulitzer Prize for general nonfiction. (Our interview has been edited and condensed for clarity.)
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Annie Nova: Your book starts with a quote by Tolstoy: “We imagine that their sufferings are one thing, and our life another.” How are we able to be so detached from the state in which so many others are living?

Matthew Desmond: The country is so segregated. I think many of us can go about our daily lives only confronting poverty from the car window or in the news.
AN: Many financially comfortable and well-off Americans, you write, live as “unwitting enemies of the poor.” How so? Can you give an example?
MD: Sure. We have this national entitlement program that’s just not for the poor. In 2020, the nation spent $53 billion on direct housing assistance to the needy, things like public housing or vouchers that reduced rent burden. That same year, we spent over $190 billion on homeowner tax subsidies. Those are things like the home mortgage interest deduction, which homeowners are entitled to. Protecting and fighting for those subsidies leaves less money with which to fight poverty.

Arrows pointing outwards

AN: So you think there should be fewer tax breaks like the home mortgage interest deduction and more policies to help poor Americans?
MD: I want to be clear: I’m not calling for redistribution. That entails giving up something that is mine and that I’ve earned. What I’m talking about is less rich aid and more poor aid. There was a study published recently showing that if just the top 1% of us just paid the taxes we owe — so not pay more taxes, but just stop evading tax bills — we as a nation could raise $175 billion more every year. That’s almost enough to pull everyone out of poverty.
AN: So getting the IRS to do more enforcement.
MD: Absolutely. When you are trying to fight for ambitious, bold solutions to poverty, you immediately run up against people saying, ‘Well, how will we afford it?’ And the answer is staring us right in the face. We could afford it if we allowed the IRS to do its job.

We can confront this issue in such a more robust way than we have. And it should shame us that we haven’t.

Matthew Desmond
sociologist and author

AN: Thinking that poverty in the U.S. is avoidable makes its existence feel so much worse.
MD: It makes it so much worse morally. We are such a rich country. We can confront this issue in such a more robust way than we have. And it should shame us that we haven’t. It should shame us that so many people are living with such uncertainty and agony.
AN: In what way do large companies in the U.S. profit from poverty in America?
MD: As union power started waning, wages started slagging. And then CEO compensation started growing. Corporations have used that economic power and transferred it into political power to make organizing hard and to combat unionization efforts.
AN: As a child, you blamed your father when he lost his job and the bank took your house. Why do you think that was?
MD: When you’re in the middle of something, you often grasp at the explanation that is closest to you, which is often about shame and guilt and blame. When I wrote my last book on families facing evictions, a lot of the families who lost their homes would blame themselves. But I think it’s the sociologist’s job, to quote C. Wright Mills, to turn a personal problem into a political one. Millions of people are facing this every year. This is not on you.

AN: You call on Americans to become “poverty abolitionists.” Why use the word “abolitionists”?
MD: I think that it shares with other abolitionist movements a commitment to the end of poverty. It views poverty not as something that we should get a little better at, but something we should abolish. Because it’s a sin. It’s a disgrace.
AN: What are the most impactful actions people can take to fight poverty?
MD: You can go to your Tuesday night zoning meeting in your community and you can support the affordable housing project that a lot of your neighbors are trying to kill. And you can say, “Look, I’m not going to deny other kids opportunities that my kids have had living here. I’m not going to embrace segregation. That ends with me.” You can shop at places that do right by their workers, and that don’t try to bust unions. There are also all these amazing anti-poverty movements in every state.
AN: I know you don’t have a crystal ball, but if more attention and resources aren’t directed at reducing poverty, what could the future look like for us?
MD: For folks who are struggling, it means a smaller life. It means diminished dreams. It means illnesses that don’t get solved. And for those of us who enjoy some security and prosperity, it means an affront to your sense of decency. If nothing improves, it really belies any claim to national greatness.

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Reports show consumer confidence is declining amid renewed recession fears.
The recent banking crisis was another blow to how most people feel about their financial picture.

When it comes to the U.S. economy, confidence is key. But the banking crisis has threatened to upset how most people feel about their financial picture.
“The bank problems are probably making a lot of people think twice,” said Diana Furchtgott-Roth, an economics professor at George Washington University and former chief economist at the U.S. Department of Labor.

“People are not as confident,” she said, referring to the “wealth effect,” or the theory that people spend less when they feel less well-off than they did before.
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As recent events prove, the line between Wall Street and Main Street has become increasingly blurred: When stocks fall, people tend to rein in their spending.
A decline in spending slows retail sales and that, in turn, triggers a market reaction that spills back onto consumers.
At the same time, income is going down — after adjusting for inflation — interest rates are going up and Federal Reserve Chair Jerome Powell says turmoil in the financial sector will cause banks to tighten their lending standards, making it even harder to borrow.

That leaves consumers with less access to cash to cover the rising cost of food, housing and other expenses. As households feel increasingly squeezed, that weighs on their confidence in the overall economic picture.

What it takes to feel financially secure

Americans now say they would need an average net worth of $774,000 to feel “financially comfortable,” but more than $2 million to feel “wealthy,” according to Charles Schwab’s annual Modern Wealth Survey. 
However, “it’s not how many dollar bills you have, it’s what you can buy with them,” said Tomas Philipson, University of Chicago economist and the former chair of the White House Council of Economic Advisers.
Any money earning less than the rate of inflation loses purchasing power over time.
The University of Michigan’s closely watched index of consumer sentiment recently fell for the first time in months. The Conference Board’s consumer confidence index is also down, according to the latest data.

Fewer consumers are planning to buy a home or car or spend money on other big-ticket items like a major appliance or vacation. That decline in spending paired with rising interest rates could likely push the economy into a recession in the near term, the Conference Board found.
Wall Street has been debating whether the country is heading into a recession for months, although many economists expected it to occur in the second half of this year.
Still, thanks, in part, to a strong labor market, the economy has remained remarkably resilient, dodging a downturn so far. 
“It remains to be seen if we will continue to do so, and partly it comes down to consumer confidence,” Furchtgott-Roth said. “People are definitely shaken up.”
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Recent bank woes and rising interest rates have many wondering what will happen next.
Experts say more market volatility may be in the forecast.

Recent bank woes and rising interest rates have prompted higher levels of economic uncertainty. When it comes to the markets, that means more volatility may be in the forecast.
Volatility happens when the value of an investment “fluctuates wildly in a short period of time,” according to the Financial Industry Regulatory Authority.

“In the months ahead, volatility may come and go,” Vanguard global chief economist Joe Davis said last week.
“And for all of us, I think it’s important to remember to focus on what we can control,” he said.
By staying invested in the markets, investors have a better chance of success when it comes to achieving their long-term goals, Davis said.

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However, the trick is stomaching the market drops to benefit from the gains that inevitably follow. Data from J.P. Morgan Asset Management shows that the market’s worst days tend to be closely followed by the best days.
There are a few things to keep in mind that can help you stick through market turbulence, advisors say.

“Staying the course is the play, because we can’t predict what’s going to happen this year, next year or in a decade from now,” Douglas Boneparth, president and founder of Bone Fide Wealth, a wealth management firm based in New York City, told CNBC.com in a February interview. Boneparth is also a member of CNBC’s Financial Advisor Council.
Here are four strategies that may help.

1. Match your risk to your goals

After dramatic market swings — from strong rallies in 2020 and 2021 to record declines in 2022 — many investors want to know, “When do things balance themselves out?” Boneparth said.
However, it would be best to instead focus on what is in your control: assessing the amount of risk you are willing to take and matching that to your investment time horizon, he said.
“These are the key pieces of information that will drive the investment decisions that we make,” Boneparth said.
If you are approaching retirement soon — from five years to as soon as next year — it may be time to reconsider your allocations, according to Stacy Francis, a certified financial planner and president and CEO of Francis Financial in New York.
“It’s a great opportunity to take a breath, have your portfolio rebound, and reevaluate after this time of real volatility to see, ‘Is this the right mixture of stocks and bonds for me for the long term?'” said Francis, who is also a member of the CNBC Financial Advisor Council.

2. Remember the most important part is staying invested

After you’ve identified the correct strategy for you, “The most important part of investing is to stay invested,” according to Boneparth.
That means having discipline and consistently putting money in the market, he said, while avoiding the impulse to sell based on short-term news.
“It’s important to remember that by staying invested, you’re playing the game of compounding your returns,” Boneparth said. “That’s how you grow your wealth.”
One thing to avoid: timing the market, which is “usually a fool’s errand,” he said.

3. Have cash set aside for emergencies

Investment exposure inevitably means taking on risk. Having cash separately set aside for emergencies can help make you better able to weather market losses — and know you’ll still be able to pay your bills.
Aim to have at least three to six months’ expenses set aside in an account you can easily access.
“It’s the first line of defense of recovering from a job loss and finding employment again,” Boneparth said.
Francis also advises clients to strive to have an emergency fund with three to six months’ expenses, she said.
Only once investors have their target emergency savings and have maxed out their retirement accounts should they consider investing their excess cash, Francis said. You should have at least five to 10 years before you will need the money, and your investments should include a well-diversified portfolio of stocks and bonds.

4. Stay humble

Even if you think you have a winning strategy, the market may still prove you wrong.
It’s a humbling experience, Boneparth said. But even some of the best portfolio managers on Wall Street can’t consistently beat the market, he said.
“As retail investors, what can we do? We can focus on the things that we can control,” Boneparth said.
That may include either a passive investing approach or a consistent investing approach, he said.
“One of these two things is usually going to pay off over the long term,” Boneparth said. More

A new Urban Institute study found that 73% of adults with medical debt owe hospitals at least some of it.
Of those who owed hospitals, 26% had a tab of $5,000 or more, compared with 6% among those who owed only non-hospital providers.
Even with health insurance, owing is not uncommon: 63% of adults with past-due medical debt incurred it when they were insured, the research found.

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Among the millions of Americans with past-due medical debt, there’s a decent chance they owe $1,000 or more, new research suggests.
While 39% of that cohort said they owe less than $1,000, the remainder (61%) owe more, including 21% who owe at least $5,000, according to the Urban Institute report, which is based on mid-2022 survey data.

“Medical debt, unlike a mortgage or car loan and things like that, we don’t really choose,” said Berneta Haynes, a staff attorney and medical debt expert for the National Consumer Law Center.
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“We don’t choose when we get sick … so medical debt comes as a bit of a surprise,” Haynes said.

The largest bills are mostly owed to hospitals

The Urban Institute study found that 73% of adults with medical debt owe hospitals at least some of it. Additionally, most of patients’ largest bills were owed to hospitals: About a quarter, 26%, had a tab of $5,000 or more, compared with 6% among those who owed only non-hospital providers (i.e., a  doctor or dentist).
“There are probably a number of explanations for the difference,” said Michael Karpman, author of the study.

“When people go to the hospital, they tend to face more higher-cost procedures, they may have greater health challenges, and there’s a lot of unpredictability about the charges and out-of-pocket costs that they’ll be facing, ” said Karpman, a principal research associate in the institute’s Health Policy Center.

Even among insured individuals, owing is not uncommon. Almost two-thirds, or 63%, of adults with past-due medical debt incurred it when they had insurance, the research found. Another 21% incurred it when the patients had no coverage and 16% had the debt occur during a time period in which they initially had coverage but then lost it or vice versa.

An estimated 100 million adults have medical debt

Overall, an estimated 41% of people — or about 100 million adults — face medical debt, ranging from under $500 to $10,000 or more, according to a report from the Kaiser Family Foundation. 
The reasons for such debt going unpaid vary from person to person. The two main causes, said Haynes, is having a chronic health condition or being uninsured — or, often, both.

Deductibles may be unaffordable for some patients

Additionally, many health-care plans have deductibles that are high enough to pose affordability challenges for some patients. Deductibles are the amount you pay out of pocket before your insurance plan begins covering your care (although you may still be required to pay a copay or coinsurance).

For example, if the patient has a deductible of $1,000 and is billed that amount all at once due to, say, a surgery or hospital stay that costs at least that much, it may be more than they have in savings, various research shows. For example, more than half of households would struggle to pay an unexpected $1,000 bill, according to a 2022 Bankrate survey.
“Having to pay a $1,000 deductible is out of the range of reality for a lot of folks and can lead to risky decisions, such as putting it on a credit card or taking out a medical credit card,” Haynes said.
The average deductible in 2022 among employer-sponsored health plans was $1,763, according to the Kaiser Family Foundation.
Other contributors to unpaid medical debt are short-term health plans and health-sharing ministries, according to the American Hospital Association. Those plans generally come with lower premiums but are not required to cover certain services and preexisting conditions, or limit out-of-pocket costs.

No Surprises Act is reducing unexpected bills

One of the biggest causes of unexpected large medical bills historically was out-of-network providers being involved in your care — often at a hospital — without you realizing it. Then the bill would come and you’d discover that your insurance didn’t fully cover those charges, if at all.
However, there are signs that the No Surprises Act has reduced many instances of unexpected, outsized bills. That legislation, which took effect in 2022, generally stops you from being billed at the out-of-network rate (although consumers should still be on the lookout for such charges due to billing mistakes).

Check whether you qualify for free or reduced care

If you are hit with a large medical bill from a hospital, be aware that many have financial assistance programs. While not all for-profit hospitals offer one, nonprofit facilities are required to have them, Haynes said.
Check the back of your bill to see if there’s information on a financial assistance program, she said. Or you can usually find it in the billing section of a hospital’s website.
Often, hospitals use 250% of the federal poverty level as the cutoff when determining a patient’s eligibility for free care or a reduced cost, the Urban Institute research notes.
The federal poverty level depends on the number of people in a household and is adjusted annually. In 2023, for a family of four, that amount is $30,000. So 250% of that is $75,000.

Some medical debt is dropping off credit reports

Separately, be aware that the three big credit-reporting companies — Equifax, Experian and TransUnion — made some changes last year to how they are handling past-due health-care bills.
As of last July, once you’ve paid off any medical debt that shows up on your credit report, it will be removed (previously, it could remain on your record for seven years). Additionally, consumers also now get a year, up from six months, before unpaid medical debt appears on credit reports once it goes to a collection agency.
The credit firms also said that in the first half of this year they will stop including any medical debt under $500 on credit reports. They are still on track to do that, according to a spokesman for the Consumer Data Industry Association.

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A credit crunch is a significant tightening of lending standards among banks. Loans are harder to get and become more costly.
The banking crisis triggered by the failures of Silicon Valley Bank and Signature Bank will likely lead small and midsize institutions to prioritize having a healthy balance sheet.
The prospect of recession led banks to cool lending even prior to recent woes.
Consumers should take steps to boost their credit score now.

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The recent banking crisis has fueled concern of a “credit crunch” and the resulting negative impact on households, businesses and the U.S. economy.
But what is a credit crunch and how might you prepare?

Loans would be tougher to get

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During a credit crunch, banks significantly tighten their lending standards.
Loans become tougher to get. Banks that offer them might do so with more onerous terms like high interest rates or other restrictions — making such financing more costly.
Overall, it becomes harder, for example, for households to buy cars and homes or fix their roofs, and for businesses to hire, expand and open new stores or factories. A cooling in bank lending flows down to the economy’s bottom line, making a recession more likely.
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“Credit is the mother’s milk of economic activity,” said Mark Zandi, chief economist at Moody’s Analytics.

“I’d be surprised if we don’t see a pretty significant tightening of credit in the near term, among small and midsize banks,” he added.
Of course, there must be a happy medium in a well-functioning economy, Zandi said.

Lending standards that are too loose can be damaging, too. During the financial crisis, for example, subprime mortgages issued en masse by banks triggered a housing crisis that ultimately cascaded into a deep recession.

Banks may prioritize a healthier balance sheet

A credit crunch seems likely given banking woes that have unfurled over the past two weeks.
Silicon Valley Bank and Signature Bank failed when depositors rushed to withdraw their money and the banks were unable to meet the cash demand.
Banks don’t keep all customers’ cash on hand. They make money off those deposits by investing some of the funds or lending it (and receiving interest payments).
Among SVB’s problems was an investment in long-term U.S. Treasury bonds. SVB locked up billions of dollars in these bonds, which lost money as the Federal Reserve started raising interest rates aggressively last year to combat high inflation.

Read more of CNBC’s coverage of the bank crisis

What this all means: To avoid a similar fate, many banks will likely prioritize shoring up their balance sheets to weather a potential bank run, experts said.
Banks might crimp lending in order to have more cash on hand to meet customer redemptions, for example. Also, if bank customers withdraw funds, a bank might then have a smaller stockpile from which to make loans.
“You’re going to see a credit crunch happening in the U.S., and that’s starting to get priced into the market in a dramatic way,” Mike Novogratz, CEO of Galaxy Digital, an investment management firm, said in an interview with CNBC’s “Squawk Box” last week.
A severe credit crunch isn’t a foregone conclusion, though.
The extent of the banking contagion remains unclear, Zandi said. The nation’s largest banks are also unlikely to significantly change their lending behavior, he added.

Banks had already been clamping down

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Banks had been reducing the flow of credit to businesses and households even prior to the recent mayhem.
In the fourth quarter, banks reported tightening their standards for credit cards, home equity lines of credit, auto loans and other consumer loans, according to the Federal Reserve’s latest Senior Loan Officer Opinion Survey. They reported increasing the minimum credit scores required to secure such loans, for example.
A significant share also tightened standards for commercial and industrial lending to businesses, the survey said.
“I think many banks would naturally be looking to potentially [tighten standards] given worries about a recession, even without these banking issues that have come to the fore recently,” said Christine Benz, director of personal finance at Morningstar.

How to prepare for a credit crunch

There are some steps consumers can take now to prepare for a possible credit crunch.
If you have a looming credit need, make sure your creditworthiness is “as attractive as can possibly be the case,” Benz said.
That might include ensuring you pay credit card bills and other debt payments in full and on time each month; reducing your credit utilization rate; or requesting a credit report and disputing any errors.
Businesses with loans that are nearing the end of their term should try to figure out how to refinance the loan or roll it over “sooner rather than later,” Zandi said.
Consumers should also shore up their “personal balance sheet” in case tighter credit were to trigger an economic downturn, Benz said. Ensure you have the cash on hand in an emergency reserve to weather potential joblessness, for example, she said.

Those reserves might be stored in an emergency cash fund, for example. A secondary line of reserves might come from setting up a home equity line of credit now and having it on standby in the event of job loss, Benz said.
Having three to six months of reserves to cover household essentials is a good starting point, she said. Older working adults and those in more specialized career paths may need more — closer to a years’ worth — since it might take longer to replace a lost job, Benz added.
Consumers should be aware that banks often retain the right to reduce the credit limit on existing HELOCs, said Allan Roth, a certified financial planner and accountant based in Colorado Springs, Colo.
Bank customers should also try to keep their savings at any one bank within the Federal Deposit Insurance Corporation limit of $250,000 per depositer, per ownership category, Roth said. The federal government backstopped uninsured deposits at SVB and Signature Bank, but that won’t necessarily be the case for future bank failures.

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Recent bank failures have caused a crisis of confidence in the financial sector, but Americans are still grappling with stubborn inflation.
The Federal Reserve is now expected to hike rates by one-quarter of a percentage point at this week’s policy meeting.
Here’s where consumers stand one year into rate increases.

Rate hikes, one year later

For its part, the Fed has already hiked its benchmark fund rate eight times over the last year to its current level of between 4.5% and 4.75%.
The federal funds rate, which is set by the central bank, is the interest rate at which banks borrow and lend to one another overnight. But Fed rates also influence consumers’ borrowing costs, either directly or indirectly, including their credit card, mortgage and auto loan rates.  

Average credit card rates now top 20%

Since most credit cards have a variable interest rate, there’s a direct connection to the Fed’s benchmark. As the federal funds rate rises, the prime rate does, too, and credit card rates follow suit.
After a prolonged period of rate hikes, the average credit card rate is now over 20%, on average — an all-time high — up from 16.34% one year ago.
At the same time, households are increasingly leaning on credit to afford basic necessities, which makes it even harder for the growing number of borrowers who carry a balance from month to month.

Mortgage rates now average 6.66%

Although 15-year and 30-year mortgage rates are fixed, and tied to Treasury yields and the economy, anyone shopping for a new home has lost considerable purchasing power, partly because of inflation and the Fed’s policy moves.
The average rate for a 30-year, fixed-rate mortgage currently sits at 6.66%, up from 4.40% when the Fed started raising rates last March.

Adjustable-rate mortgages, or ARMs, and home equity lines of credit, or HELOCs, are pegged to the prime rate. As the federal funds rate rises, the prime rate does, as well, and these rates follow suit. Most ARMs adjust once a year, but a HELOC adjusts right away. Already, the average rate for a HELOC is up to 7.76% from 3.96% a year ago.

Auto loan rates rose to around 6.48%

Even though auto loans are fixed, payments are getting bigger because the price for all cars is rising along with the interest rates on new loans.
The average interest rate on a five-year new car loan is now 6.48%, up from 4% one year ago.

Federal student loans are already at 4.99%

Federal student loan rates are also fixed, so most borrowers aren’t immediately affected by rate hikes. The interest rate on federal student loans taken out for the 2022-23 academic year already rose to 4.99%, up from 3.73% last year, but any loans disbursed after July 1 will likely be even higher.
For now, anyone with existing federal education debt will benefit from rates at 0% until the payment pause ends, which the Education Department expects to happen sometime this year.
Private student loans tend to have a variable rate tied to the Libor, prime or Treasury bill rates — and that means that, as the Fed raises rates, those borrowers will also pay more in interest. How much more, however, will vary with the benchmark.

Deposit rates at banks can reach 5.02%

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While the Fed has no direct influence on deposit rates, the rates tend to be correlated to changes in the target federal funds rate. The savings account rates at some of the largest retail banks, which were near rock-bottom during most of the Covid pandemic, are currently up to 0.35%, on average.
Thanks, in part, to lower overhead expenses, top-yielding online savings account rates are as high as 5.02%, much higher than last year’s 0.75%, according to Bankrate.
Although most savers don’t need to worry about the security of their cash at the bank, since no depositor has lost FDIC-insured funds due to a bank failure, any money earning less than the rate of inflation still loses purchasing power over time.
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