Rising interest rates cause widespread panic and concern among households. The focus of the accompanying media coverage tends to be on the effects of the rise and the agenda of the political parties, thus heightening the state of alarm. It can appear like no one is offering any real options for keeping the debt in check.  Thankfully, there are some ways to manage the inevitable debt whilst maintaining a state of calm.

“Interest rate rises are the traditional signal to review your household budget and debt”, says ‘x Adviser’ of Australian Loan Company. “When faced with financial hurdles, we often review the luxuries in our life in order to complement our major liabilities.  However, thorough assessment of your existing debt is also crucial in relieving the strain.”

Rising interest rates are especially burdening for borrowers with multiple existing loans.  One strategy that the Australian Loan Company member recommends is combining this overall debt into one account to help manage your liabilities.

“In the case of multiple debts, you can try to consolidate them all into one, decreasing the overall interest rates as lenders will discount their rates for larger loans.”

A common trap for borrowers is to jump quickly into a loan with a small interest rate.  Borrowers are often dazzled by what seems to be a great deal, without reading the fine print.  According to ‘x adviser’, a little preparation goes a long way.

“These deals with so-called ‘honeymoon rates’ commonly have catches including lock-in periods, large additional fees or reduced rates on a short-term basis only.”

“You should also consider the term of the loan, which will influence your fortnightly or monthly repayment amounts.”

Help is available for budgeting and planning your repayments.  Your financial planner can make a plan for you and help you interpret the industry jargon.

‘x adviser’ says that while rate rises are inevitable, a small amount of forward thinking can ensure you don’t get caught out paying too much further down the track.  “It is best to speak to your financial adviser to prepare for future rate rises and determine appropriate repayments for you.”