How Rising Interest Rates Could Impact Your Finances
If you’re like most people, you probably don’t think much about interest rates. After all, what does it really matter what the rate is when you’re just trying to get by day-to-day?
However, the truth is that interest rates have a big impact on your finances – whether you realize it or not. And with rates on the rise, now is the time to start paying attention.
Here’s a look at some of the ways that rising interest rates could impact your finances:
1. The Cost of Borrowing Money Will Go Up
Whether you’re taking out a mortgage, a car loan, or a personal loan, the cost of borrowing money is going to go up. That’s because when interest rates rise, so do the rates on these types of loans.
So, if you’re thinking about borrowing money in the near future, you may want to do it sooner rather than later. Otherwise, you could end up paying more in interest than you originally planned.
2. Your Credit Card Debt Will Become More Expensive
If you have credit card debt, you’re going to see your monthly payments go up. That’s because credit card companies typically charge a higher interest rate than other types of lenders.
And, with rates on the rise, those higher rates are only going to get higher. So, if you’re carrying a balance on your credit cards, now is the time to start paying it off. Otherwise, you could end up paying a lot more in interest than you anticipated.
3. The Value of Your investments May Go Down
When interest rates rise, the value of your investments may go down. That’s because when rates go up, people tend to put their money into savings accounts and other types of investments that offer a higher rate of return.
So, if you have money invested in stocks or mutual funds, you may see the value of those investments go down.
However, it’s important to remember that the stock market is always fluctuating. So, while your investments may go down in value in the short term, they could rebound over time.
4. Your Mortgage payments Could Rise
If you have a variable-rate mortgage, your monthly payments could go up. That’s because when rates rise, so do the payments on these types of loans.
However, if you have a fixed-rate mortgage, your payments will stay the same. So, if you’re worried about how rising interest rates could impact your finances, this is one type of loan that you don’t need to worry about.
5. You May Have Trouble Qualifying for a Loan
As rates rise, lenders become more selective about who they lend money. So, if you’re thinking about taking out a loan, you may have trouble qualifying for one.
That’s because when interest rates go up, lenders want to make sure that borrowers can afford the higher payments. So, if you’re thinking about taking out a loan, you may want to do it sooner rather than later.
These are just some of the ways that rising interest rates could impact your finances. So, if you’re not paying attention to rates, now is the time to start. Otherwise, you could end up making some costly mistakes.
