Adapting to Changing Credit Trends:Tips for Financial Well-being in 2024
By StoryStudio on February 12, 2024
Year after year, it’s important to stay informed about changing trends that impact our overall financial landscape. Unfortunately, personal finances can often be an unsavory subject that many people try to sweep under the rug. However, from an interest rate perspective, not addressing issues can cost the average household quite a bit of money.
As the President and CEO of Texas Bay Credit Union, Jesse Gutierrez is one of Houston’s leading financial experts who is here to provide insight and proactive steps for people to stay informed on evolving credit trends in 2024.
Interest Rate Changes in Recent Years
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Jesse Gutierrez
For those who haven’t been following the market over the past three or so years, it’s crucial to note that interest rates have gone up. Right after COVID hit in 2020, the Houston housing market was red-hot, resulting in bidding wars and rising home prices that created a “hypermarket.” Today, this is no longer the case.
“Inflation was also going rampant, and the Federal Reserve raised the interest rates to slow down the growth of inflation and bring down activity,” Jesse Gutierrez comments. “If you went back 36 months ago, interest rates were around 3.5% on a 30-year mortgage. A couple of months ago, it doubled to 7%.”
On that same note, credit card interest rates were previously around 19%. Now the average credit card out there is charging almost 28% as the new standard.
“That changes the game big time from an affordability perspective,” Gutierrez adds. “It’s causing people to drown in their own debt.”
On the bright side, if you look at a credit union like Texas Bay, the highest rate they ever charge anyone is 18%, and one of their credit cards even runs around 13%. The discount you get from doing business with a credit union over a bank cannot be understated.
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Anticipated Shifts in Interest Rates in 2024
Looking ahead to the remainder of 2024, even the brightest financial minds in the world can only speculate on shifts in interest rates that will occur in the coming year. While there might be some relief with a potential reduction in rates, the overall trend suggests a gradual adjustment rather than a rapid decline.
“I expect that by the end of 2024, you’ll probably see a reduction of at least a half percent over where we’re at today, but that’s not the kind of relief that people are looking for,” Gutierrez says. “They’re not going to just all of a sudden drop back down to where they were 24 months ago.”
As for the impact this has on borrowers, the good part is it forces individuals to reengage with their personal finances.
“Not only are interest rates higher, the cost of everything has gone up,” Gutierrez continues. “The greatest opportunity that I see at this time for people to start thinking about getting themselves out of debt.”
Evolving Lending Practices
In 2024, lending practices are undergoing a significant tightening as lenders actively work to minimize risk. The rationale behind this shift lies in the correlation between rising interest rates and an increase in bankruptcies, prompting lenders to become more risk-averse.
“Unsecured debt has reached the highest level ever in history, and that says that people are overspending,” Gutierrez states. “They start pulling back, and they’re only going to make loans to people who have a better credit score.”
Since the overarching trend points toward reduced lending availability, coupled with higher interest rates, a proactive approach for consumers is to treat this financial checkup as routine maintenance and prevent a decline in their FICO credit score – and even work on getting their personal score raised.
Adapting to 2024 Financial Trends
If you’re trapped in a hopeless sea of debt and want to boost your credit score, there are proven ideas to get you in better financial shape once and for all, even with 2024’s interest rates and lending practices. Here are some tips!
If you own a home and its value has increased, consider taking out a home equity loan to pay off your credit cards. “A home equity loan runs around 7.5 to 8.5% versus 28% for credit cards,” Gutierrez says. “You’re gaining almost 70% roughly in savings on finance charges. It’s a significant drop in costs and payment.” And an added benefit is that all interest is tax deductible on your personal tax filing.
Consider home equity loans
Why Choose Texas Bay Credit Union
There are numerous reasons to choose Texas Bay Credit Union as your trusted financial institution, and topping the list is their outstanding customer service, which bucks modern trends. In fact, if you perform a quick Google search of Texas Bay’s 9 convenient locations all over Houston, you’ll see their branches hold hundreds of reviews averaging 4.9 out of 5 stars.
“We stand out that much more today because the rest of the world’s service quality has gone into the ground,” says President and CEO Jesse Gutierrez. “You don't have to take my word for it. Look at what our members are saying about us. That gives me so much pride. I’ve been in this business now for 37 years, and in all that time, we have always provided exceptional service in good times and in bad.”
As all of us navigate the financial landscape of 2024, these recommendations can serve as a roadmap to better financial health and stability. You might need an advisor by your side too, one who will never cease to put its members first. For that, look no further than Texas Bay.
ABOUT TEXAS BAY CREDIT UNION
Founded in 1936, by Houstonians, for Houstonians, Texas Bay works tirelessly to provide the best service to their members and works to find each member a tailor-made solution to help them reach their financial dreams. Visit www.texasbaycu.org for more info, including branch locations and hours of operation.
If you don’t have home equity available, then tax refund season can be a good time to address debts. Use your tax refunds to pay down high-interest debts, such as credit cards.
Utilize tax refunds
This one isn’t as much of a joke as you might think. “I will caution anybody that pays off credit cards, don’t charge those balances back up,” Gutierrez warns. “Take those cards and put them in a Ziploc bag in your freezer, so the next time you need to pull one out, you think about what you’re doing. It sounds crazy, but it works.”
Put your credit cards in the freezer
The ultimate goal is to increase monthly cash flow. When deciding which debts to pay off, consider the minimum monthly payments. By paying off the debts with higher minimum payments first, you can create more financial flexibility each month, allowing you to get debt-free even faster.
Focus on cash flow
Consider seeking assistance from financial professionals, such as credit unions. This no-cost service for members can provide you with a personalized analysis of your financial situation and guide you in managing debt strategically.
Seek professional guidance
