The Fed and your wallet

The Federal Reserve is expected to end its nearly year-long campaign of steep interest rate cuts later this afternoon. Economists predict short term interest rates will remain at two percent. Here are some strategies you can use in a rising interest rate environment.

1) Don’t wait to refinance
Now is the time to get into a fixed rate product. If you have an adjustable rate mortgage that dodged the bullet on the rate reset in 2008, may not be so fortunate this time around. Consider refinancing to lock in a rate.

2) Pay down debt
On credit cards, there are no real protections for a rising interest rate environment. A fixed rate card offers no insulation because it’s only fixed until the credit card company wants to raise it. Your best defense is to pay down your debt as quickly as you can.

3) Don’t lock-in long term CDs
If you’re a CD investor, you don’t want to lock in long maturities. Instead, set yourself up in a six month CD so that you can benefit when rates are at higher levels later this year. What makes it attractive isn’t the yield, but the ability to reinvest 6 months down the road when returns may be higher.