There are quite a few frugal people out there that are glad to see interest rates on the rise. For example, my family has very little debt and what we do have features fixed rates. We like to see that some of our investments are getting a little higher interest rate. It makes us want to save.
Low interest rates are used to jump start the economy. They encourage people to buy on credit. Take out a new loan or buy a home with a mortgage, the rates are low and you can pay it later.
Basically, consumers go deeper into debt to make the economy better.
When interest rates are rising, consumers are being encouraged to stop spending and to save. Interest rates are more favorable for saving than they are for borrowing.
Look at the rising interest rates as a big neon flashing sign that says “save, save, save.” You need to pay off your debt and save your money.
Really, you should do this regardless of interest rates. It takes you at least 3/4 the time to save the money to buy something as it takes you to pay off the loan.
If you have credit cards or flexible rate loans, you are probably starting to see some incentive to pay off your debt. Interest rates are going up, causing your monthly payments to increase. In fact, many homeowners are finding that they can no longer afford their own homes due to the increases in interest rates.
So next time you consider spending with that little plastic card with your name on it, think about how high interest rates could go and how much it could cost you in the long run. Remember, $10 on your credit card easily could cost you $100 to pay back.
You should probably assess your interest rates and see where you stand.
Make a list of all of your loans. Make sure you list the total balance due and the interest rate. This is going to be your guide for paying off your debt. Once you write it all down, add it all up and see the numbers on paper in your writing, you may become a little worried. But take a deep breath It isn’t that hard to get out of debt. It just takes time and dedication.
Start with paying extra to your largest cost card. This could be the highest interest rate, or the highest balance. Pay faithfully — paying off each one with the money you save from the previous one.
Now let’s look at your savings. If you don’t have any, you should. If you do, assess what interest rate they are getting right now. You may find that you should shop around for the best rates. Let your money work for you in the best way it can.
These two lists will tell you how interest rates are working for you. Hopefully, you will be like my family where interest rates are definitely working for us as rates go up. Or your rates could be working against you. Take the time to sit and figure up how interest rates really affect you.