Houston - The Fed has indicated it could raise interest rates for the first time in three years, as soon as March.
Hiking interest rates is meant to curb inflation, but it also means you'll pay more for money that you borrow.
You have about a month to make some smart moves before it happens.
"When the Fed says it’s going to raise interest rates, it means it’s going to cost us more to borrow money," explained Colleen McCreary with Credit Karma.
The Fed has signaled it could raise interest rates up to four times this year. Hikes often come in quarter-point increments. On $10,000 of debt, four rate hikes could cost you $100 more a year in interest.
You'll see the change on your variable rate credit cards about two billing cycles after a hike. Try to pay down or transfer as much debt as you can to a lower rate.
"Grab one of the 0% balance transfer offers now because, as rates go up, the generosity of those offers isn’t going to be as good, or as plentiful," said Greg McBride with Bankrate.
"Calling your credit card company and saying, 'What can you do for me?' I’ve been making all of these on-time payments, I’ve been a really good customer,'" suggested McCreary. "If you want to keep me, what can you do to lower my interest rate now?"
If you're looking to buy a car, analysts say auto loan rates are based more on competition that rate hikes, so it won't make much of a difference.
"Dealers are going to do whatever they can to get you on the lot and get you to buy that car," said McCreary.
Higher interest rates will have a much bigger impact on mortgages, home refinancing, and equity lines of credit. If you're looking to buy a home or refinance, you may want to secure financing sooner rather than later.
"If you delayed refinancing, you want to move quick," said McBride. "Mortgage rates are already up half a percentage point just since late December."
One of the biggest impacts you'll see from rising interest rates is on private student loans because many have variable rates.
Now is the time to pay down the principle if you can, or look at consolidating or refinancing them before March.
"Refinancing that private student loan debt can be advantageous if your credit has really improved, if your income is better, you’re a better credit risk," said McBride. "You may be able to refinance those private student lonas that you took out at a higher rate now at a lower rate."
According to data from New America, the average student loan borrower has nearly $40,000 in loans at an average 5.8% interest. If you refinanced a ten-year loan to 3.8%, you'd save about $4600 over the term of the loan.
Most existing Federal student loans are fixed rate and will not change. Federal loan payments continue to be paused without interest through May 2022. You may want to use that cash to pay down higher interest rate debt until then.
You can refinance federal student loans, but think carefully. They come with protections, such as income-driven plans, deferment, and forbearance options, if you fall on hard times.
Interest rates on savings accounts and CD's will also go up. However, those rates are relatively low, so it won't mean a big boost.