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

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 Try cutting your debt with the avalanche method, which targets this high cost of debt first.

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 The rates for federal student fixed-term loans for college students move with the ten-year Treasury notes, which may be secure at current rates as it may be challenging for the federal government to raise these costs on college students.

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

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