Any efforts you make now to pay down debt and boost your savings will help you if the economy eventually stalls.Credit card interest rates are particularly sensitive to aggressive Fed interest rate hikes, according to McBride.
Borrowers are already seeing the effects of the central bank's March hike, with the average rate moving up to 16.43% from 16.34%, McBride said.If the Fed is particularly aggressive and raises interest rates by three percentage points in the next year-and-a-half to two years, your credit card interest rates will likely also increase by that amount over that time frame.
That way, you give yourself an 18- to 21-month runway to pay off your debt while also protecting that balance from rate increases.Online savings accounts are poised to be the most competitive to put your cash as interest rates go up. Certificates of deposit, which require you to lock in an interest rate for a fixed amount of time, should generally be avoided as rates rise.Mortgage interest rates are now at about 5% after a sharp run-up that began at the beginning of this year, noted McBride.For many borrowers, that may come as a shock.
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