KANSAS CITY, Mo — The Federal Reserve raised interest rates yet again by another quarter point on Wednesday.
The rate increases over the past 14 months have more than doubled mortgage rates, increased the cost of auto loans and made credit card borrowing and business loans more costly.
According to Stephanie Olson, a financial planner and owner of Adulting Financial, lot of American families are struggling with credit card debts and the increasing rates are only making it worse.
This often leads to credit card holders spending more in interest than they did on their initial purchase.
“A lot of people just throw every penny they have at a credit card and then when an emergency happens, they don’t have anything to fall back on," Olson said. "And they end up putting more money on a credit card, and then with them raising interest rates, they end up paying more and more into interest and it's a never-ending cycle."
Contrary to common practices, Olson believes it is not necessary for people to use credit cards.
In fact, they can focus on building an emergency fund without putting money towards monthly payments.
“It’s really that simple of — what is my income, what are my expenses and make sure you’re living within your means," Olson said. "The key part is that end number. If you have a $100 leftover at the end of the month, what are you doing with that? And having a plan for that money."
Olson also says it is important to read the fine print when signing onto credit cards.
While the offer may sound enticing, their interest rates may be locking clients in on a long-term commitment that does more harm.
“A lot of credit cards post up at colleges — that is their bread and butter. They get you to sign onto a credit card for a free t-shirt," Olson said. "And there’s really no benefits that they are giving you. All they are doing is locking you into their interest rates."
For certain consumers in the Kansas City area, they are looking for unique ways to meet their needs.
Many are flocking to local second-hand stores like Troost39 Thrift Store, where prices are kept the same no matter what, and the owners work with customers on a first name basis.
The store is owned by Toni and Chuck Wurth, who says foot traffic has increased year after year since they took over the location six years ago. This communicates to them that there is a need.
“We know our folks, and they’re comfortable in telling us 'Hey, it's even worse than it was last month,' or something like that. So we give things away,” Wurth said. “The price structure that we have has been the same since we started. And it’s priced basically to make it affordable for people who ride the bus.
Toni Hicks is a regular customer who is retired and living on her late husband’s unemployment benefits.
As an artist, she comes to the store often to buy materials for a fraction of the store price.
“Some place like Target, you’re gonna spend $35 for one blouse, you know. And here you can get it for $3. And they have cute stuff,” Hicks said. “I save a ton of money."
And for Dwainette Jackson, she says she would not have a lot of the things she has and needs if it was not for the shop.
Jackson has been coming to shop for 20 years and it has helped even more since she has been on disability benefits since 2013.
“If you don’t have enough, they’ll let you come back and get it later or whatever," Jackson said. "Pay a small amount. They just work with you."