4 Ways To Fight Back Against Inflation This Summer
From vacations to nonstop air conditioning to weekend trips to farmers markets, the summer can be a costly time of year. Who doesn’t want to take advantage of all the season offers?
But another key factor will again impact your summer costs: inflation.
“Inflation may have peaked, but it’s far from gone,” cautions Matt Schulz, LendingTree chief credit analyst. “Americans should still budget and plan as if prices are going to continue to significantly rise for the foreseeable future. It’s better to be over-prepared and have the worst-case scenario not happen than to be under-prepared and hope for the best.”
With that in mind, here are four tips to help you beat inflation this summer.
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No. 1: Revisit your budget
If you haven’t looked at your budget in a while, there’s a good chance that a lot of the assumptions you made are now outdated because of inflation.
“That could give you an inaccurate picture of your financial situation, which can give you real problems when bills come due,” Schulz says.
You’ll want to look especially close at everyday expenses more severely impacted by inflation, such as gas, food and electricity.
No. 2: Cash in on your good credit (if you have it)
If you’re on a good streak with your credit-building habits, like paying your bills on time and lowering your revolving debt, you may be able to get your credit card issuer to lower your interest rate. And all it might take is a phone call.
“It works more often than you’d realize,” Schulz says. More than 3 in 4 cardholders who asked for a lower APR in the past year got one, and the average decrease was 6.3 percentage points. “That’s a big deal and can save you hundreds of dollars in interest over the life of the balance,” he adds.
If you don’t have a credit card that best suits your needs, like saving money on a vacation this summer, it could be worth looking into a rewards card that suits your spending patterns, too.
The key here is to shop around to make sure you’re getting the card that best fits your situation. And if you’re applying for a card to get a sign-up bonus, you should feel comfortable spending the required amount to get that bonus — and ideally be able to pay off the balance before you’re charged interest.
But Schulz cautions: “As great as credit card rewards can be, if you go into debt chasing them, the math no longer works in your favor.”
No. 3: Carefully consider your debt payoff strategy
For those with existing high-interest debt, it’ll always be good to work on reducing that as much as possible. But it’s especially important during times of higher inflation, when interest rates tend to increase.
“A 0% balance transfer credit card is a great tool,” Schulz says. “It can dramatically reduce the amount of interest you pay and the time it takes to pay down that debt. You likely need good credit to get one, but it can be a game-changer if you do.”
Another option here would be taking out a low-interest personal loan to make progress on paying off your debt. Just keep in mind that you wouldn’t be getting 0% APR offers (so it costs more, long term) with a personal loan. And you’ll generally need at least decent credit to access them. So prequalification, which doesn’t impact your credit and shows you potential loan offers, is vital to finding the best option.
No. 4: Maximize your savings
A high-interest climate doesn’t just mean you’ll pay more to borrow money —it also means you can expect higher interest rates on savings accounts. And that’s not something you should overlook.
“Take advantage of high-yield savings accounts,” Schulz says. “It can certainly be easier said than done when inflation is so prevalent, but if you can put a little bit more into your savings in the coming months, it can pay off in a big way. It’s not unusual to find savings accounts offering returns of 4% or more, which would have been unheard of not long ago. Those higher yields mean real money.”
If you find saving money difficult, setting up a small automatic deposit every month — preferably scheduled after your typical paycheck deposit day — could help you build your savings and capitalize on those higher rates.