When it comes to your CD rates, do you know the difference between nominal and real interest rates? Don’t feel bad if you don’t. Many consumers today are in the exact same boat. But a recent post by Kim Petch at Money Crashers helpfully lays out the difference between the two and explains why it’s a piece of financial information that every saver should have.
So where does this leave you the consumer? Petch points to the old rules of financial survival of living within your means, mapping out a budget, and having your savings automatically withdrawn from your paycheck. Unlike inflation, these factors are entirely in your control.
Will the idea of a nominal vs. real rates change how you save money? Does the fact that inflation affects everyone make it less of an issue for you?