Rate rise set by bank
In a move that surprised most commentators the Bank of England last week raised interest rates by a quarter point to 5.25%. This takes rates to their highest levels in 10 years. For consumers the timing is likely to mean a painful January as credit card bills start to arrive and mortgage lenders pass on the cost of the rate rise. Don't panic though - by grabbing the best deals now you can get your finances fighting fit and reduce the impact of this new year double whammy.
Homeowners on an introductory rate that is about to come to an end should consider re-mortgaging as soon as possible before the best rates disappear. In the worst case scenario someone on a 2 year fixed rate that is ending in February could be looking at as much as a 2% rise in their interest rate.
For savers the news will be more positive. But don't be too surprised if the process of upgrading rates on savings accounts isn't handled quite so quickly. Even if your bank does pass on the increase quickly, are you sure they are giving the best rate? It's worth waiting a couple of weeks until all the major players have made their moves and then checking out the market. By registering with TheRateTart you can set up a free savings email alert; we'll drop you a note with a link to our savings comparison tables so that you can easily check out the best deals on the market.
If you have debts on credit cards or a personal loan the interest rate rise is unlikely to have a direct impact. The interest rate on an unsecured personal loan is usually fixed when you take it out, whilst credit card interest rates tend not to rise and fall with the Bank of England base rate. However, if you are going to be squeezed on your mortgage or overdraft, you may still be able to reduce costs in other areas.
For credit card debts do you have the card with the best deal for you? Check out TheRateTart Guide to Credit Cards to match your spending and repayment habits with an ideal type of credit card.
If you have a personal loan and are outside the early repayment period check out our comparison tables to see whether there is a better deal on offer.
Finally don't forget to do a general review of your budget. There may be other areas where you have become stuck in a rut and and aren't saving as much money as you could be. Home insurance, car insurance and broadband are all areas where shopping around can produce substantial savings. Even telling your current provider that you are thinking of switching can prompt them to offer you special unpublicised retention rates.
This may sound like a lot of effort. But in reality most companies do all they can to help new customers switch, because it is in their interest to do so. And by conducting a thorough clear out of your finances it's really not too hard to beat the rate rise with money to spare.
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