6 Financial Steps To Take Now If You’re Worried About A Recession

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Talks about a looming recession have been circulating headlines for months, with no clear answer as to what Americans can expect. While some economists don’t see a global recession happening anytime soon, other top finance execs have predicted everything from a recession by the end of this year to a 50-50 chance of a recession next year to a “mild” recession come 2024. JPMorgan Chase CEO Jamie Dimon sparked a cause for alarm last week when he warned of an economic “hurricane.”

One thing we know for certain is that today’s record-high inflationary environment — and, in turn, the Federal Reserve’s swift tightening — is a key factor contributing to a potential economic downturn. Historically, recessions have typically followed the Fed raising interest rates to combat high inflation.

Though there are a number of other recession indicators to consider in the bigger picture, such as rising unemployment, it’s no doubt that recession fears are leaving many Americans feeling uncertain about their financial futures. In fact, a recent CNBC All-America Workforce Survey found that 83% of employed adults are worried about a recession, making it the biggest near-term concern and beating out worry over wages (74%), Covid (62%), pay cuts (46%) and layoffs (44%).

Since a recession is technically defined as two consecutive quarters of declining gross domestic product, or GDP, we won’t know for sure until the numbers are reported in July — keep in mind, however, economic flows such as this are inevitable.

In the meantime, experts advise that it’s never a bad idea to check in with your money habits to set yourself up to be in the most secure financial position possible. You can stress less about what happens with the economy knowing that you have built the most stable foundation you could.

“I’ve always maintained the stance that people spend way too much time trying to predict the market, interest rates and where the economy is going and way too little time managing their money,” says Clark Kendall, certified financial planner, president and CEO at wealth management firm Kendall Capital.

Here are six smart financial steps to take right now.

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1. Make your dollars go further

2. Take another look at your spending

3. Get rid of high-interest credit card debt

With prices rising significantly on everything from groceries to gas and travel, many consumers are turning to their credit cards to get by.

While credit cards can help you in a pinch, not paying off the balance entirely by the end of your billing cycle can add up quickly. Credit cards already have notoriously high interest rates, but as the Federal Reserve continues to raise rates, carrying a balance will become even more costly.

“I see smart people panicking about the rising price of gas — when they have no idea how much they spend on bigger items,” Dvorkin says. “For instance, you probably know the cost of a gallon of gas in your neighborhood. Do you know what the interest rate is on your credit card? If you carry a balance, do you know how much that’s costing you annually?”

Put a stop to interest accruing by signing up for a balance transfer credit card that gives you time to pay off your balance interest-free. The Citi® Diamond Preferred® Card, Citi Simplicity® Card and Wells Fargo Reflect℠ Card each offer the longest introductory interest-free period for qualifying balance transfers of up to 21 months from date of first transfer (Citi cards) and from account opening ( Wells Fargo card) (after, 14.49% to 24.49%, 15.49% to 25.49% and 13.74% to 25.74% (see rates and fees) variable APR, respectively). All transfers must be completed in the first four months for both the Citi Diamond Preferred Card and the Citi Simplicity Card and within 120 days to qualify for the intro rate and fee for the Wells Fargo Reflect Card. If you are worried about a pending recession, eliminating your high-interest debt now means one less financial obligation you’ll have to account for if money gets tighter.

If you find you need to rely on credit to make it through the high cost of living right now, a 0% APR credit card can help you finance new purchases while giving you ample time to pay off your balance before interest kicks in. The American Express Cash Magnet® Card offers no interest for the first 15 months on purchases from the date of account opening (after, 14.74% to 24.74% variable APR; see rates and fees). Cardholders can also score unlimited 1.5% cash back on all purchases. While the zero-interest period gives you some breathing room, just make sure you have a plan in place to eventually pay off your balance before the 15-month introductory period ends.

4. Extra cash? Boost your emergency fund while you can

5. Stay the course with your investments and think long term

6. Consider rolling over to a Roth IRA

Bottom line

Information about the American Express Cash Magnet® Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.

For rates and fees of the American Express Cash Magnet® Card, click here

Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.

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