How Higher Interest Rates Will Affect Consumer Finances-Debt, Savings and Investments?

Why Interest Rates Will Rise Although the fed funds rate is not a consumer interest rate, raising it will lift most consumer borrowing rates.

1. Consumers Should Limit Borrowing. Consumers should reduce discretionary spending during periods of higher rates and postpone any unnecessary borrowing as interest rates rise.

2. Avoid Carrying Large Balances On Your Credit Cards Credit cards carry the highest borrowing rates of most consumer loan products, averaging 19.49%

3. Move To Conventional Mortgages Versus ARMs If you have your heart set on buying a home this spring, the window will soon be closing on consumers seeking an affordable mortgage

4. Avoid Variable HELOC Loans Your HELOC is a revolving line of credit secured by the equity in your home, often used to pay for home improvement projects.

5. Car Loans May Not Go Much Higher The higher interest rates may not affect car loans as much as the continued chip supply constraints in the short term.

6. Avoid Variable Student Loans Students will likely see higher interest rates on variable private loans.

7. Savers Will  Earn More Income When interest rates rise, households become more significant savers.

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