FORT WAYNE, Ind. (Indiana’s NewsCenter) – Even as Congress raised the debt ceiling and limited spending, Standard & Poor’s downgraded the U.S. credit rating from AAA to AA. Today, Indiana’s NewsCenter met with a financial planner to see how this will affect you.
Todd Larson is a regular guest of Indiana’s NewsCenter’s The Noon Extra and is a financial expert. Larson says the downgrade is something Wall Street saw coming long before the news of the downgrade broke late Friday night. Larson says anyone with a variable loan rate will feel the affects of the downgrade.
“Loans that have an adjustable rate could get more expensive, so that could be a home equity line of credit, it could be a college loan or a credit card and you'll see the interest rates slowly rise."
Larson says that because the interest rates are sure to rise, it is important that consumers explore all of their options. One piece of advice Larson offers is the opportunity to lock-in a long-term fixed interest rate.
“Go to your student loans or your credit cards and look at locking-in a rate long-term. If you have a home equity line of credit, maybe you pay that off or turn that into a fixed rate mortgage. That would be a wise move. The other thing is, don't panic. This too will pass.”
Some financial forecasters have pointed to the possibility of a double-dip recession. Others are saying that the country remains in the recession that began in 2008. Larson says we’re in a “slow, ugly recovery.”
Larson also says that in order for the United States to re-secure its AAA rating from Standard & Poor’s, the country will need to pay off its debt and end political posturing.
“Most economists agree that we need a combination of increased taxes and decreased spending to make this happen. The danger that the Tea Party brings is that they’re fighting any increased taxes.”
Larson says he does not believe politicians in Washington D.C. are taking the crisis seriously enough and urges constituents to write and call their representatives to take a different approach to the crisis.
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