With another rate hike by the Fed looming, it’s time to act.  5 things you can do to protect your finances

With another rate hike by the Fed looming, it’s time to act. 5 things you can do to protect your finances

With another rate hike by the Fed looming, it's time to act.  5 things you can do to protect your finances

With another rate hike by the Fed looming, it’s time to act. 5 things you can do to protect your finances

Federal Reserve Chairman Jerome Powell is focused on curbing inflation using the best tool at his disposal: raising interest rates.

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And while President Joe Biden is bullish on August’s inflation numbers, the combination of high inflation and rising rates has left millions of Americans feeling trapped.

Getting worse. Consumers should not expect that pinching feeling to subside any time soon. With another rate hike almost certain next week, that feeling could become even more acute.

Here are five money moves you might want to jump on before rates rise again.

1. Tackle Your Debt

As the Fed raises interest rates, lenders are following suit. Some types of fixed-rate loans take a while to go up, but you can consider variable rates such as credit cards or home equity lines of credit (HELOCs)](https://moneywise.com/mortgages/mortgages/what-is -a-heloc-and-is-it-right-for-you) are affected immediately.

That means the interest on your already expensive credit card goes up essentially overnight.

While many households took the time to pay off their balances during the pandemic, outstanding balances are increasing again. According to data from the Federal Reserve, outstanding credit card balances increased by $570 million between the first and second quarters of this year.

Lately, if you’ve been relying on your credit cards to make ends meet or overspending, expensive interest rates will add up quickly, meaning paying off your debt should be a top priority — or it’ll cost you even more.

2. Work on your credit score

It’s worth improving your credit score whether you want to get a loan quickly in the next month or two before rates rise or you need to borrow later.

Raising your credit score by a few hundred points makes you a more attractive borrower to all types of lenders – from credit card issuers to mortgage lenders.

You may need to take steps to improve your score to ensure you can borrow at favorable rates once the Fed starts tightening lending. Checking for errors is a good start.

3. Reduce Your Monthly Expenses

With inflation still stubbornly high, it’s a given that everything is more expensive these days.

And while raising interest rates is the Fed’s best tool for fighting inflation, it means you don’t get a break from anything from your debt to your dinners.

Energy, food and fuel are both huge contributors to high inflation. Save as much as possible on your bills at the gas station and the supermarket.

Then go through your budget and see if there are things you can cut: cancel streaming subscriptions you don’t use, have date nights at home, and call your service providers to see if they can offer you a cheaper rate.

Better yet, with insurance, if you haven’t looked at your options in the past six months, it might be time to start looking for a better deal — it could save you hundreds over the course of the year.

4. Look for Investment Opportunities

If you fancy a little risk, you can put more of your money into investments. While the stock market has fallen significantly from its all-time highs during the pandemic, the recent dip offers investors looking to the future a great opportunity.

If you don’t retire in a decade or two (or maybe three), a bear market offers the opportunity to acquire for much less what would have been an expensive portfolio.

But if you can’t risk your principal or are concerned about the wild stock market swings of late, learn more about alternative investments that don’t rely on the ups and downs of the market.

5. Ask for help when you need it

Managing your money doesn’t have to be complicated, but it can be confusing. And there’s no better time to call in backup than when it seems harder to achieve your financial goals on your own.

Working with a financial advisor can help you get your priorities straight and ensure you are on track for both your long-term and short-term goals.

You also don’t have to commit to a long-term relationship if that doesn’t suit you – fixed or fee-only, consultants can help you develop a fixed-price plan and get you to work if you just want a professional to guide you. points in the right direction.

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This article provides information only and should not be construed as advice. It comes without any kind of warranty.

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