An Interest Rate Increase Is Long Overdue
The highly anticipated rise will be good for savers and investors.

Federal Reserve Chairwoman Janet Yellen is at it again—hinting that the time might finally be right to raise interest rates.
Here's hoping it finally happens this year.
What should you do if it does? If you are risk-averse, you can take advantage of the higher yields from bank products such as certificates of deposit, money-market accounts and savings accounts. For those who have exposure to the markets, evaluate your current stock and bond market exposure and make necessary adjustments.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.

Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
The last time the Fed increased rates was December 2015, and an expectation was set at that time—based on the strength of the economy and the labor market—that we would see three to four increases in 2016. So we waited and watched and... nothing.
If the Fed comes through in December, it will be welcome news. As former FDIC Chair Sheila Bair said recently, "We've been keeping interest rates far too low for far too long." The increase needs to be slow and gradual, she told FOX Business Network, "but they need to get on with it."
I agree. The Fed has been roundly criticized by economists and politicians for propping up the U.S. economy, distorting the market and creating a bubble that's doomed to burst. And Yellen has earned a reputation as an interest-rate tease, bouncing back and forth between optimism and pessimism—and taking the American public with her. (The job market is doing well. Yay! But, hold on, there could be significant repercussions from the Brexit. Ohhh!)
Meanwhile, if you're looking for a way to save and invest, you're being punished. If you put your hard-earned dollars in a money-market account or certificate of deposit (you know, the way your risk-averse but savvy-about-saving parents and grandparents did?), you're actually losing money. And you have been for years. Because if you're making 1% interest, and inflation is 1.5% to 2% (those are the Fed's figures, by the way), you're simply not keeping up.
This is especially unfair to older workers who want to move from stocks and bonds to something more conservative as they prepare to retire and to elderly Americans on a fixed income, who rely on interest income to cover their living expenses.
Raise the interest rate, and they'll likely loosen their purse strings, which benefits the economy. And younger investors might learn to keep some money outside of the volatile market—in savings—and use that, instead of credit, to pay for high-ticket items. Imagine that.
We're ready. The Fed's year of waffling sends a message that, when it comes to the economy, at least, things aren't so bad—bumpy, perhaps, but not bottoming out. And a higher interest rate gives the market somewhere to go if things really do go south.
If you remember back to the terrorist attacks in 2001, the interest rates were up around 4% or 5%, which gave the Federal Reserve some wiggle room to reduce rates and bring some calm to the financial markets. When you're at 0%, what are you going to do? There isn't any room left.
Yellen continues to say the Fed's decision on rates will depend on economic data and not a preset timetable. Let's just hope when the increase finally comes, it isn't too little too late.
Christopher A. Murray is a professional financial adviser, insurance professional and president of the Maryland-based Murray Financial Group. He is a Certified Fund Specialist and Board Certified in Mutual Funds.
Kim Franke-Folstad contributed to this article.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Christopher A. Murray is a professional financial adviser, insurance professional and president of the Maryland-based Murray Financial Group. He is a Certified Fund Specialist, Board Certified in Mutual Funds and a Certified Senior Consultant. Murray has produced and hosted the weekly "Your Financial Editor" radio show for 17 years and provides daily business and financial market updates. He is an active member of the National Press Club and has contributed to several publications, including "The Wall Street Journal."
-
Stocks Swing in Volatile Session: Stock Market Today
The main indexes fell sharply in early trading on rising China tensions, but rebounded thanks to encouraging bank earnings.
-
Don't Miss Out! A Quiz on Medicare Enrollment Deadlines
Quiz Test your basic knowledge of Medicare enrollment periods in our quick quiz.
-
A 'Fast, Fair and Friendly' Fail: Farmers Irks Customers With Its Handling of a Data Breach
Farmers Insurance is facing negative attention and lawsuits because of a three-month delay in notifying 1.1 million policyholders about a data breach. Here's what you can do if you're affected.
-
Serving the HNW Market: How Financial Advisers Can Break Through and Deliver Lasting Value
Financial advisers have a significant opportunity to serve high-net-worth clients by elevating their capabilities, delivering comprehensive planning, building diverse teams and prioritizing family wealth education.
-
Don't Just Sell, Connect: How Financial Advisers Can Ignite Their Sales Growth
Avoid complacency and embrace small, consistent improvements to optimize your sales process and results.
-
Are You a Small Business Owner Buckling Under Economic Pressure? Here's How You Can Cope
Significant emotional and financial challenges, including tariff worries, are piling up on small business leaders. Here's how leaders can develop more healthy coping strategies and systems of support.
-
To Raise Prices or Not to Raise Prices: Tariff Tips for Small Businesses
Small businesses are making critical decisions. Should they pass on higher costs due to tariffs, or would that only cost them more in lost customers?
-
Five Retirement Planning Traps You Can't Afford to Fall Into, From a Wealth Adviser
To help ensure you reach your savings goals and enjoy financial security in your golden years, be aware of these common pitfalls. The key is to be proactive, informed and flexible.
-
Your 401(k) Can Now Include Alternative Assets, But Should It? A Financial Adviser Weighs In
Many employer-sponsored plans offer limited investment options, which can stunt growth. But participants considering alternatives might need some sound advice to get the most from their accounts.
-
Will Taxes Shred Your 401(k) or IRA During Your Retirement? It's Very Likely
Conventional wisdom dictates that you save in a 401(k) now and pay taxes later, but turning that rule on its head could leave you far better off. A financial planner explains why.