How to Get Ready for Higher Interest Rates

As interest rates rise, people will have to pay more for credit cards and loans. With higher interest rates, people will be discouraged from borrowing and spending.

People who already have loans will have less disposable income because they will have to pay more in interest.

If you are currently holding any financial products such as adjustable-rate mortgages (ARMs), home equity lines of credit (HELOCs), auto loans, or credit cards, you should take action immediately.

Mortgage rates also will rise as interest rates go up. If you are thinking about buying or refinancing a home, lock in the lowest fixed rate available to you.

If you have credit card debt, consider transferring your balance from your credit card — which generally has a higher variable interest rate — to a zero-rate balance transfer card that locks in a zero-rate for a period of 12 to 21 months.

Taking this action protects you from rates rising as well as giving you a chance to pay off your debt in full.

If you’ve been waiting for that next car, rising interest rates will ultimately increase the amount you will pay, so it’s more important than ever to shop around and find the best annual percentage rate (APR).

Credit score

When it comes to APR, your credit score plays a huge factor in qualifying for the best rates. If you need to bring your score up, you may have some long-term planning to do.

Meanwhile, focus on paying off your credit card balances and avoiding late payments on your bills.

Nevertheless, when you are looking to purchase that new car, try timing your purchase around sales events and other promotions from manufacturers.

This includes factory cash back, lease specials, and zero percent financing.

The bottom line is rising interest rates translate to higher costs. By taking advantage of the low rates currently available, you can save and put those dollars towards future purchases.