In your 20s, student loans with interest rates greater than 6% can be considered high-interest, and in your 30s anything over 5%, in your 40s over 4%, and all student loans should be prioritized after 50.
Generally, what's considered a bad interest rate is anything higher than 10%. Ideally, you want to get an interest rate that's below 5% — but with little or bad credit, that can be harder to achieve.
Even small changes in your rate can impact how much total interest amount you pay overall. The total interest amount on a $30,000, 72-month loan at 5% is $4,787—a savings of more than $1,000 versus the same loan at 6%.
So a good mortgage rate could look drastically different from one day to the next. Right now, good mortgage rates for a 15-year fixed loan generally start in the high-5% range, while good rates for a 30-year mortgage typically start in the high-6% range.
According to Rachel Sanborn Lawrence, advisory services director and certified financial planner at Ellevest, you should feel OK about taking on purposeful debt that's below 10% APR, and even better if it's below 5% APR.
But there's one place where would-be buyers can still find 30-year mortgage rates below 6%, and even under 5%. Home builders in certain markets are offering 30-year mortgage rates as low as 4.99% to entice buyers who've been spooked by high housing costs. The relatively low rates come with some caveats, however.
As you will see, the future value of $30,000 over 20 years can range from $44,578.42 to $5,701,489.13.
For example, if you take out a five-year loan for $20,000 and the interest rate on the loan is 5 percent, the simple interest formula would be $20,000 x . 05 x 5 = $5,000 in interest.
A high-interest loan is one with an annual percentage rate above 36% that can be tough to repay.
A good rate for a mortgage now is anything below the average rate for a 30-year mortgage, which is 6.67% in mid-June 2023. But a good mortgage rate can be different for every borrower, depending on their financial situation and credit score, as well as the type of home loan they're applying for, among other factors.
A high-yield savings account that pays 5% interest is highly competitive. Not only does it significantly outpace the average savings account interest rate, but it's on the high end of the scale even for high-yield savings products.
Consider debt consolidation.
If you have several sources of high-interest debt, debt consolidation may help you get a better handle on what you owe. This process allows you to combine several existing debts into a single, brand-new loan, ideally with a lower interest rate and more favorable repayment terms.
To save a million dollars in 30 years, you'll need to deposit around $850 a month. If you make $50k a year, that's roughly 20% of your pre-tax income.
A high Annual Percentage Yield (APY) means your money grows faster. With a 5% APY, your savings will increase more quickly compared to lower-rate accounts. For example, if you deposit $10,000, you could earn about $500 in interest over a year. This is much better than accounts with 0.5% or 1% APY.
Excellent credit results in the lowest rates — and poor credit may have rates over 30%.
If you have a conventional loan, $800 in monthly debt obligations and a $10,000 down payment, you can afford a home that's around $250,000 in today's interest rate environment.
2021: The lowest 30-year mortgage rates ever
And it kept falling to a new record low of just 2.65% in January 2021. The average mortgage rate for that year was 2.96%. That year marked an incredibly appealing homeownership opportunity for first-time homebuyers to enter the housing market.