Straight Talk

3 debts you should watch as the Federal Reserve raises interest rates

Key Points
  • The Federal Reserve is expected to steadily raise interest rates this year, which could drive up the cost of your existing debts.
  • Keep an eye on your mortgage, student loans and credit cards, and look into whether refinancing those accounts can help keep the interest you're paying down.
Money moves you want to make as the Fed raises interest rates
Money moves you want to make as the Fed raises interest rates

The market has already started anticipating rate hikes by the Federal Reserve, and you should too.

Central bank officials have said they are planning to raise rates three times this year. That could go up to four hikes, depending on how June unemployment rate numbers play out.

Those moves under Federal Reserve Chair Jerome Powell will change how you access credit and borrow money.

One key area you want to watch is how these changes affect your existing debts, according to Ted Jenkin, CEO of Oxygen Financial.

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Here are three key debts Jenkin recommends you should watch.


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If you have an adjustable rate mortgage, now may be the time to lock in a lower rate by moving to a fixed-rate mortgage.

"Or you may just want to start paying off the mortgage more quickly," Jenkin said.

Student loans

You should also look at any student loans that have variable rates, which may climb really high as the Fed bumps rates up, Jenkin said.

Refinancing your student loan now can help keep your interest rates lower.

Credit cards

You could get a shock on your credit card statements after rates rise, when your annual percentage rate jumps two or three percentage points.

As such, that debt will cost you more, and you will want to adjust your monthly budget to accommodate that, Jenkin said. Or better yet, pay down those debts before rates go up.

And don't forget to look at how these moves could affect your investments.

"Typically, as interest rates rise, your equity or stock investments will start to slow down," Jenkin said. "You should think about this when you look at rebalancing your portfolio."