Rising interest rate is now upon us what can we do?

In an attempt to fight inflation, the Federal Reserve Bank has increased interest rates twice this year first time by 25 basis points and the second time by 50 basis points. In addition, they have also indicated they intend to continue raising rates until they have a better gauge on inflation. Therefore, it means the cost of money will go higher with higher interest rate on credit cards, mortgages, auto loans, and other loans. Now what can we do?

First you should avoid carrying any credit card balance if you use your card. Pay it in full at the end of the month.

If you have a Home Equity Line of Credit, consider increasing your monthly payments so you can pay off that debt sooner. In addition, do not add any newer debt to a line of credit. As the cost of money keeps going higher, the interest that you pay on the Home Equity Line of Credit will also go higher. If you are going to use your credit card, use the ones that pay cash back and are still paid in full at the end of the month. Nowadays, some credit cards will allow you to use the cash that you have accumulated towards paying down your balance. Therefore, use that option if available.

Since the Federal Reserve Bank indicates that they will continue to increase the interest rate until they have full control over inflation, avoid getting any variable-rate or adjustable-rate mortgage at this point as they tend to adjust higher as the Federal Reserve Bank increases interest rates.

Lastly if you have an adjustable rate you may want to consider locking it now if possible, in order to have a better control over your cash flow.

The information contained in this report does not purport to be a complete description of the securities, markets, or developments referred to in this material nor is it a recommendation. The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Ricardo Baptiste and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.