How Interest Rate Hikes Affect Consumers as Inflation Rises
Consumers should reduce discretionary spending during periods of higher rates and postpone any unnecessary borrowing as interest rates rise.
Credit cards carry the highest borrowing rates of most consumer loan products, averaging 19.49%. Having large balances month to month, makes it challenging to get rid of this costly debt.
Instead, try cutting your debt with the avalanche method, which targets this high cost of debt first.
Move To Conventional Mortgages Versus ARM
Consumers with adjustable-rate mortgages or ARMs bear the risk of paying higher borrowing rates.
Avoid Variable HELOC Loans
Most HELOCs are variable-rate loans that fluctuate with the prime rate, but customers who desire predictability in their budget can ask for a fixed-rate option.
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.
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