When interest rates increase, this tends to affect everyone. Some people will have loans and they will be impacted in a different way to those people who have savings. It is good to know what might happen so that you can prepare yourself.

If You Have Loans

If you have loans then it is very likely that the amount of interest that you pay on those will increase. If you have a fixed rate of interest this will not change though, but once your fixed rate period ends, you could end up paying significantly more. If you have a variable rate of interest, then it is likely that your interest rate will go up almost as soon as the rate rise is announced. This means that you will be paying more out each month and it is worth making sure that you find out how much extra you will need to pay as soon as you can. You may find that there are better deals available

If You Have Savings

If you have savings accounts then the amount of interest that you get on these may go up. Banks do not have to increase the rates and some may not do this, but it is worth checking. You may find that some places put up their rates and some do not. It can be good to be aware of the rates that you are getting and looking to see whether you might be able to get a better rate somewhere else.

If you Have Neither

If you do not have loans and savings, you could still be affected by rate increases. This is because it can have a knock-on impact on other things that you buy. If you rent your home, for example, then the rent could go if your landlord is paying a mortgage on the home. You could find general prices go up if companies are having to pay back their loans at a higher rate and their profit margins are being squeezed.

It can therefore be a good idea, to start by making sure that you are not paying more than you have to for everything. This will more directly impact your loans and then savings accounts but it may impact other prices as well. It will mean that you will need to compare costs on these items and see whether you can change what you are doing so that you can save money. Comparison websites can be a good place to start. Make sure that you check regularly as it could be that some prices and rates may not change right away but there may be a delay so you will need to be aware of it and make sure that you keep checking.

If you are worried that you are going to struggle with your loan repayments and there are not any significantly cheaper options, then talk to your lender. It could be possible that they will be able to help you by reducing your payments and increasing your term. This could be more expensive overall but it will enable you to be able to manage more easily and so could be worth thinking about.

If you are getting more interest on your savings, it can be easy to relax and think you need not do any more. However, it is a good idea to make sure that you are aware that there could be rising prices and you need to make sure that you will not be paying more than you can afford for things. Keep an eye on prices and note what you are buying and see whether you can buy things for less money elsewhere, buy different things or cut down on the things that you are buying. This could be worthwhile for everyone to try to do. Partly because it is never good to spend more money than necessary on things and because it is a good idea to be aware of prices and how much you can afford to ensure that you are not spending more money than you can afford.

Even if the impact on you is not big, it is well worth being prepared. Interest rate rises tend not to be isolated. Once rates start to rise, they tend to continue to rise over time and this means that you might need to start thinking about ways that you can either cut back on your spending or earn more money so that you can afford those rising prices.