But savers, borrowers and market watchers are wise to prepare for changes in the wind, even if huge rate increases aren't on near-term forecasts.
High school grads heading to college should bank on higher rates ahead for college loans.
"I expect interest rates on federal education loans to continue to rise each year for the next several years, especially as the Federal Reserve board stops manipulating interest rates," said Mark Kantrowitz of Edvisors.com.
As of July 1, federal student loan rates will edge up. Rates overall will be up 0.8% compared to current rates.
Federal Stafford Loans for undergraduate students will be 4.66% — up from 3.86%. Federal Stafford Loans for graduate students will be 6.21% — up from 5.41%.
Federal Grad PLUS and Federal Parent PLUS Loans will be at 7.21% — up from 6.41%.
The higher rates add about $46 to $49 a year to borrowing costs for every $10,000 in student loans borrowed on a 10-year term. Total costs would increase by $460 to $492 over a 10-year repayment term of the loans, Kantrowitz said.
Last year, federal student loan rates were unusually low, with nowhere to go but up, Kantrowitz said.
But by next year, he predicts rates could be higher than 6.8% on the Stafford loan and higher than 7.9% on PLUS loans.
Kantrowitz said he predicted rates would start heading up when Congress switched the way student loan rates are handled. Now interest rates are fixed, but each year's loans are at a new fixed rate. Congress changed the interest-rate formula in August, retroactive to July 1, 2013.
Feel like your credit card debt is under control because you can make the minimum payments? Or ready to borrow more because you found a limited-time offer at 0%?
Greg McBride, chief financial analyst for Bankrate.com, said shoppers wo! uld be wise to pay down their credit card debt now to avoid higher interest rates in the future.
When overall rates climb higher, rates will jump on variable-rate credit cards and the minimum payment goes up too.
"2014 may be your last hurrah for paying down that debt in an environment with the tailwind of lower interest rates rather than the headwind of rising rates," McBride said.
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McBride said he would not be surprised to see credit card rates climb in the next year or so.
"You better have a game plan for paying it back," McBride said.
Rates for savers haven't shown much sign of life for quite some time, but that can could change too.
"The lift-off on short-term rates by the Fed is still close to a year away (give or take a few months)," according to a May report by Diane Swonk, chief economist for Mesirow Financial in Chicago.
"Lift-off" is the new lingo for the first increase in the Fed's short-term interest rates from the current level of zero.
Rates could be held low as well by tensions in Ukraine that already led to lower bond yields in the United States and Europe, she noted.
Even so, savers can spot slight improvements here and there.
In May, the new rate on Series EE savings bonds was set at a fixed rate of 0.5% for 20 years. But if someone held that bond for 20 years, the bond would double in value and the effective rate would be just over 3.5% compounded semi-annually.
Though that rate is low, savers are getting a far better rate than the 0.1% they got on Series EE bonds from November through the end of April. That was the lowest fixed rate ever set for Series EE bonds.
But the upside again for truly long-term savers who bought those 0.1% bonds in recent months is if you'd wait until 2033 or longer to cash that bond, you would see the bond double in value and get a much higher effec! tive rate! . The key is the bond must be held up to the original maturity of 20 years to get that higher rate of return.
New Series I savings bonds, if bought from May through October, will earn a composite rate of 1.94% for six months.
Series I bonds fluctuate based on inflation. The earnings rate for Series I bonds is a combination of a fixed rate that applies for the life of the bond, and the semi-annual inflation rate. The fixed rate on I Bonds issued from May 1 through Oct. 31 is 0.1%.
But that fixed rate is lower than what savers got in the past. The fixed rate was 0.2% on I Bonds issued from November through April 30. So over the long run, those would be slightly better bonds for savers to hold on to. The initial composite rate for I bonds issued then was 1.38% — including the fixed rate at 0.2%.
Rates for savings bonds are set each May 1 and Nov. 1. Savings bonds held less than five years are subject to a three-month interest penalty. Both series I and EE bonds may be redeemed after 12 months and have an interest-bearing life of 30 years.
Contact Susan Tompor at stompor@freepress.com
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