In February 2022, the Bank of England raised interest rates from 0.25% to 0.5% – this was the second time.
At over 5.4%,is the highest it’s been for 30 years. The Bank of England uses interest rates to control inflation – usually, the higher the rate of inflation, the lower you can expect interest rates to be.
So even though milk and bread might feel expensive, it might be cheaper to borrow money on a credit card.
However, interest rates have been at an, which means inflation has soared. When the rate of inflation rises too quickly, the Bank of England raises interest rates in an attempt to slow it down and keep the cost of living stable.
The rise in interest rates means the cost of borrowing could go up. Banks are now likely to try and take advantage of rising interest rates by passing on this increase to people borrowing money, rather than those saving money.
This means that you could see an increase in mortgage, credit card and loan rates, but won’t necessarily see much more of a return on your savings.
How can you protect yourself against rising interest rates?
****If you’re paying interest on your credit card, shifting your balance to a could save you hundreds of pounds in interest. Some offers on ClearScore give you up to 31 months of 0% interest for a 1.5-3% balance transfer fee.
If you’re planning on buying something big, getting a new card with a 0% purchase rate could be a smart move before interest rates rise more. These cards let you spread the cost of new purchases over an interest-free period.
Don’t pay the standard variable rate on your mortgage. Mortgage rates are going up, but there are still some great deals out there. If you’re on a, then you might be able to save by remortgaging.
Activate yourfor instant access to improved offers that could save you money – you just need to link your bank account. It’s completely safe and secure, and you can unlink at any time.
Be ClearScore sure about your credit choices** – make sure you’re not paying more interest than you need to be.