Massachusetts

3 tips to protect your finances from interest rate hikes

By Jason Law, Boston 25 News and CNN
By Jason Law, Boston 25 News and CNN

DEDHAM, Mass. — Like millions of Americans, a Brookline mother Amy Donahue said the rising costs at the grocery store and gas pump have forced her to change her spending habits.

“I think it’s a huge burden on working families,” Donahue said. “You just have to make good choices with what you buy, whether it’s changing to store brands or just buying different things and cutting something out that would normally buy.”

With prices surging and families struggling to keep up, the Federal Reserve took the bold step this week to raise interest rates by three-quarters of a percentage point. The hope is that it will bring inflation down, but the rate hike will impact millions of households and businesses, pushing up the cost of borrowing for major purchases.

“For people who are first-time homebuyers, looking to get that mortgage right now, that’s going to become much more difficult than it would have, a few months ago. People who are in the market to purchase a car, are going to have higher borrowing rates today, than they did three months ago,” David Wilcox with the Peterson Institute for International Economics told CNN.

Wilcox said right now:

  • THE AVERAGE CONSUMER SHOULDN’T OVER-EXTEND THEMSELVES ON CREDIT.
  • YOU SHOULD PAY OFF YOUR CREDIT CARDS IF YOU CAN
  • TRY NOT TO BORROW MONEY FOR ONE-TIME, BIG PURCHASES, LIKE VACATIONS OR FURNITURE.

“I think it’s going to be volatile. That’s what I’ve been telling clients all year,” said Caleb Harty with Harty Financial in Andover.

Harty said the rising interest rates are going to hurt people who are looking to tap into their retirement accounts soon.

“If you’re not looking for a home, the rising interest rates doesn’t necessarily have a huge impact. But it’s had a huge impact on the market. So I think folks who are approaching retirement right now are spooked. The stock market is very volatile,” Harty said.

CNN reports Federal Reserve Chairman Jerome Powell hasn’t ruled out another significant rate-hike in the coming months.

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