Has anyone been able to read the news over the past couple of years without noticing articles about high interest rates? Everywhere you look there is a financial pundit predicting how the Federal Reserve will respond to the most recent economic news. Over the past several years, the Fed has raised interest rates to fight inflation. High interest rates have impacted Americans across the board, whether it’s home mortgages, investments, or debt. It’s hard to argue that the increases haven’t impacted people’s lives. Oftentimes the discussion surrounding high interest rates focuses on the younger generation’s ability to afford their first home. However, interest rate increases have also impacted older adults.

The impact on seniors has been a mixed bag. First, the good news. Seniors have been able to invest money in products like certificates of deposit and savings accounts, benefiting from a higher rate of return. For example, savings account rates are around 5%. This provides another investment vehicle compared to investing in riskier options like stocks or mutual funds. Safer investment products can be especially beneficial for older seniors and more conservative investors whose strategy is less risk adverse.

Unfortunately, high interest rates provide a downside for older Americans, especially those carrying credit card debt. When the Fed raises rates, it can cause credit card interest rates to increase. According to TransUnion, the average credit card balance for someone 65 and over was $4,700 in 2023. This is particularly problematic for older Americans who are forced to put medical expenses on their credit card. While seniors benefit from Medicare, the program doesn’t always pay for everything.  Medicare recipients are still responsible for things like co-pays and deductibles. Making matters worse, the Urban Institute reports that seniors with unsecured debt often have higher rates of health issues.

For seniors living paycheck to paycheck, higher interest on credit card debt can be financially crippling.

Moving can also be made more difficult because of higher interest rates. CNBC published a story called, “Why so many Americans feel trapped in their homes by their low-rate mortgages”, highlighting Bob and Terri Wood, older adults who are married and currently have a 3.125% mortgage rate. While they would prefer to downsize their home and be closer to family, they don’t want to lose a favorable interest rate. Currently home interest rates are around 7%. For seniors that intend to take out a mortgage for a new home, even when downsizing, current interest rates might make moving economically unfeasible. Furthermore, the housing stock has gone down because less people are putting their house on the market.

News about interest rates appears to monopolize economic stories. While it’s hard to predict the future, it doesn’t seem like interest rates are substantially coming down anytime soon. Like other age groups, high interest rates are a mix of good and bad news for older adults. Financially established seniors can benefit from higher interest returns. Sadly, for seniors who are more economically strained, increases in interest rates can be a back breaker.

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Evan Carmen, Esq. is the Legislative Director for Aging Policy at the B’nai B’rith International Center for Senior Services. Click here to read more from Evan Carmen.