financial tips for rising interest rates

7/26/2022

Woman looking up interest rates on her laptop.

Interest rates are on the rise, and this may affect your personal finances. Fortunately, there are tips for rising rates that will help you remain financially healthy during this time! Continue reading to stay prepared and learn more.

credit cards 

When the Federal Reserve raises the funds rate, interest rates on variable-rate credit cards will also increase. These changes will happen gradually and in small increments; however, if you carry this type of debt, start paying down your credit card balances now. Make sure to focus on the cards with the highest interest rates first, as they will be the most affected by the increase.

Improving a poor credit score will also be essential as rates begin to rise. This is because the lowest available rates are not offered to those with poor credit. A few simple ways you can improve your score include:

  • Paying your bill on time
  • Keeping at least 70% of your credit available
  • Carrying a mixture of dept types such as personal loans and auto loans

For more tips and information on how you can improve your credit score, check out our blog: Five Ways to Establish Good Credit.

pro tip: Taking advantage of 0% APR on balance transfers is a great way to lower your monthly payments when interest rates are on the rise. At BlueOx Credit Union, we offer this for the first 6 months you have your new card – as well as no annual fees, no cash advance fees, and so much more! Click the link to learn more:

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loans

Interest rates on new mortgages and loans are also going to rise as the prime rate does. Like credit cards, though, there are options that can help.

If you need financing during this time or want to prepare for the higher monthly payments on your loans, consider getting a fixed-rate loan before any substantial increases happen. Fixed-rate loans will NOT increase with rising interest rates, so your future set payments will not be affected. If you have an adjustable-rate loan, you could refinance it to a fixed-rate loan for the same benefit.

BlueOx and our partners at Mortgage Center offer various refinancing options. You could lower your monthly payment, shorten the term of your mortgage, or use the equity you built to take out cash from your home. Click the link to learn more:

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savings and investments

Unlike those with credit cards and loans, rising interest rates actually help people who are saving their money! This is because the interest you get paid out may increases when the prime rate does.

Take advantage of savings and investment accounts with higher interest rates during these times and watch your returns grow! CDs and Money Market Accounts are fantastic options because they already offer higher rates and dividends than traditional savings accounts.

pro tip: The length you keep funds deposited into a CD is important when rates are high. Traditionally, the longer you allow your CD to mature, the more money you will get paid. With these circumstances, however, a shorter term is more beneficial because you can take advantage of the high rate before it decreases again.

what’s next

BlueOx Credit Union cares about your financial health! That’s why we have partnered with GreenPath Financial Wellness to provide you with access to FREE one-on-one financial counseling, financial education tools, and debt management services, such as:
 

  • Debt Management Plan
  • Housing Services
  • Student Loan Counseling
  • Credit Report Review

Learn more and request financial counseling today!

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Request Financial Counseling 



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