Debt can be a challenge to manage, even in the best of times. Now, with interest rates likely to continue rising, how do you effectively manage your debt as the cost of borrowing for homes, cars, and credit cards rises?
Here are five general questions to ask to minimize the hit to your wallet in the face of rising interest rates.
What is your current credit score?
Knowing this information helps you understand how rising interest rates will apply to you. Some research shows that only 33 percent of Americans checked their credit score in the past year. Regularly monitoring your credit can alert you to errors, protect you from fraud, and provide you with valuable information to strengthen your credit score – which can potentially minimize the rising cost of borrowing.
What’s your debt portfolio?
Another helpful course of action is to make a list of your current debt such as credit cards, car loans, student loans and other debt. Although it’s a simple step, this can make a big difference in visualizing the big picture of your financial situation. Part of seeing the impact of rising interest rates is understanding exactly where you stand.
What are your current interest rates?
An effective next step is to regularly review your balances, terms, and interest rates every month. By staying on top of this vital information, you can make adjustments and informed decisions about reducing any existing balances more aggressively. As a debt paydown strategy, it often makes sense to start with the highest-interest credit cards or loans.