INDIANAPOLIS — Eight times a year, the nation's central bank, the Federal Reserve, meets up to take the economy's temperature and act accordingly.
Right now, it's hot.
"Inflation has been accelerating," Greg McBride with BankRate.com said. "And this has added some urgency to the Federal Reserve getting started with this process of raising the cost of money to pump the brakes on the economy."
McBride said during the pandemic, rates dropped to near-zero levels to make sure people kept spending. And spend we did. Now, that needs to be unwound one baby step at a time.
"They're going to start bumping those (rates) up beginning with a quarter-point increment this week," McBride said.
And when this rate hike likely happens, some of your debts may be affected.
Existing fixed loans like your mortgage or car payment won't be affected. But debt with a variable rate, or rates that can change, will be affected.
"If you have variable rate debt, such as a credit card, look at one of those 0% or other low-rate balance transfer offers," McBride said, "that will insulate you from the rate hikes we expect to see. But then it also gives you this runway, so you can get that debt paid off once and for all."
You'll also want to look at your home equity line of credit, too.
"See if your lender will allow you to fix the interest rate on your outstanding balance. That's another great way to insulate yourself from the effect of rising interest rates," McBride said.
If you don't have variable debt, look at where your savings is parked.
McBride said traditional banks are not in a rush to pass the higher rates onto your savings.
However, online banks will.
At Bankrate.com, you can search to see who is paying what in interest.
Online bank interest rates ranged from 0.5% to 0.7%.
A traditional bank may be around .01%.