Savers will gain and borrowers will lose as interest rates rise this year, experts say.
That being said, if concerned consumers are thinking about prioritizing dealing with debts that may soon become much more expensive, both Smith and Wolf immediately note that credit card rates are already astronomically high.Article content
The next debt that jumps out to economists is mortgages. Rising interest rates translates into mortgages costing homeowners more. For those with variable-rate home loans, the effect will be almost immediate.If he had a variable-rate loan, Wolf says he’d convert it to a fixed-rate loan as fast as he could.Both Wolf and Smith point out that it’s important to consider the bank’s intentions here.
Smith says those who have savings should soon see the results of the bank’s interest rate hike — if they haven’t already. Wolf adds that while savers do benefit from that response, with inflation as high as it is, it’s likely to offset major gains.
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